The core inflation trend is encouraging, but not as good as 0.1% m/m PCE increase implied by April CPI & PPI. Falling portfolio management fees, a result of stock market, explain a big chunk of that. @fcastofthemonth estimates market-based core PCE up 0.3% in April. But it has been running well below regular core, so this merely closes some of the gap.

Given extreme partisan influence in sentiment surveys maybe we should just look at independents. Their small recent bounce in U of M expectations seems to better reflect improvement in financial conditions than the continued drop in the overall index. (H/T @ollyallenecon)

Thomas Odenwald left Silicon Valley to join a German AI startup. There, colleagues lacked engineering skills; his team lacked stock options, everything moved slowly. After 2 months he quit. @TomFairless & @davidluhnow show why Europe is a tech midget.

https://t.co/nlES97skfp

2/ This is partly global. But US deficits are now such a huge part of developed market borrowing (67%) that it's clear the impulse from U.S. to other bond markets is stronger than vice versa. pic.x.com/lXQdg8DBvC

1/ Rising 10-30 year yields without changed Fed expectations tells you this is about deficits and eroding reserve status of $. The term premium (the statistical junkyard for stuff we can't explain) has shot up to 90 bp, from negative. My column: wsj.com/economy/centra…

Hey @PTetlock, @dcsandbrook of @TheRestHistory is a fox: "the more intelligent ... or the more highly educated, the more wrong people tend to be, because they’re so certain of their own distinction that they hand down these kind of magisterial judgments that are absolutely ludicrous." washingtonpost.com/lifestyle/2025…

Stan Fischer has died. The legendary and influential economist, former vice-chair of the Fed, #2 at the IMF and governor of the Bank of Israel, was also personable and funny. A few passages from my obit: https://t.co/ykxLVf3Y3z

2/ @ojblanchard1 recalls Fischer and Rudi Dornbusch asking PhD students to present while jogging. “When the argument became too involved ... Stan would accelerate the pace to force the speaker to slow down their presentation.”

3/ Fischer, saltwater economist to his core, advised against a single economic rule such as fixed or floating exchange rates. “The only sure rule is that whatever exchange rate system a country has, it will wish at some times that it had another one,” he once remarked.

4/ In this 2016 speech Fischer, a consummate teacher, tells you all you need about the evolution of modern macro to hold your own at an economics faculty cocktail party. He tells of the PhD who returns after 50 years to his alma mater and discovers the exam questions are still the same. “Ah yes,” he is told, “but all the answers are different.” federalreserve.gov/newsevents/spe…

Hiring freezes and staff shortages have reduced how many prices and outlets the BLS can check, leading to a potentially less reliable consumer price index, @mattgrossman reports.

https://t.co/OJO0jTfjsa

What have foreign students brought us? The USB port, invented at Intel by Ajay Bhatt who came here from India as a student. Plus countless other innovations and startups. Must-read by @pkwsj on the economic bounty of student visas.

https://t.co/lFT3C92KOo

1/ The case for a rate cut is growing. The Fed has been on hold b/c it saw more risks to inflation than employment. The risks are shifting towards employment. Fed doesn't need to cut next week but its outlook / rhetoric ought to pivot. My column:

https://t.co/4dqRgB1amR

2/ Tariffs haven't raised inflation as much as predicted. Reason is a mystery. Tariff revenue = 3% of goods consumption May, but we don't see that in consumer prices, retailer/wholesaler margins, or import prices (thru April).

3/ Perhaps more important, inflation ex-tariffs has resumed its bumpy downward drift, just as Fed expected. Softening housing costs, airfares are pulling services inflation down. Core PCE = 1.3% annualized last 3 months.

4/ Tariffs could yet bump inflation up in coming months. But odds are improving it does not become a sustained trend, because labor market is loosening. Unemployment to 2 decimals up 4 months straight:

5/ The repeated, and substantial downward revisions to monthly payrolls are notable, revealing a real step down in job creation.

6/ ADP and jobless claims, which serve as a check on the establishment survey, also suggest a weakening in job creation at existing firms, and *maybe* a pickup in layoffs. (2 weeks of elevated claims do not *yet* constitute a trend ...)

7/ One reason for Fed to stay on hold is inflation expectations are still elevated. But focusing only on the two year Treasury inflation breakeven, markets are less worried than a few months ago.

8/ The Fed doesn't need to be in a rush to cut now like in September because nominal rates are 100 bp lower, and tariffs are ahead. Strong equities suggest no recession in the offing. But evolving data argue for a shift in tone/bias.