Military aid for Ukraine
During the conference at the end of the NATO summit in Madrid, US President J. Biden announced the imminent announcement of the transfer of the air defense system, radar and ammunition to the HIMARS system to Ukraine. He said the US and NATO would support Ukraine as long as necessary.
He stated that it would be possible to impose a price cap on Russian oil in order to limit Russia’s profits from its sale. He also said that the Gulf countries should increase their oil production because it is in their best interests.
USA: Fall in real consumer spending and downward revisions for previous months fuel fears of recession
Real spending of US consumers fell by 0.4% MoM against the consensus -0.3%, data for April was revised from 0.7% to 0.3%. Nominal household spending in the US increased in May by 0.2% MoM against 0.4% consensus and compared with 0.6% in April (after revision down from 0.9%). On the other hand, the incomes of Americans increased similarly to the previous month and in line with the consensus by 0.5%.
The PCE consumer spending deflator (the Fed’s preferred measure of inflation) amounted to 6.3% YoY in May, slightly below the 6.4% consensus and similar to April. Meanwhile, the core PCE (measure excluding energy and food prices) declined to 4.7% YoY from 4.9% (with 4.8% consensus). This is still more than double the Fed’s 2% target.
Weaker May spending data and significant downward revisions for the previous months are changing our assessment of US consumption resilience. The deep drops relate to expenditure on durable goods (including cars) – a decrease by 3.5%, but also expenditure on food and clothing decreased (a decrease by 0.6%), only increased on services (by 0.3% ), slower than expected.