Australian dollar rises as US consumer falls

DXY was soft Friday night:

AUD was up across the board:

Commodities firmed:

Miners did not:

EM is over:

Junk is stuck:

US yields are heading for new highs at the short end:

Stocks only go up:

Strange trade. The big release of the night was US PCE which was weak. TSLombard:

Real personal consumption spending looks set to come in at around 0.8% Q/Q in Q2, compared to 4.2% in Q1(SAAR) — assuming June spending does little to alter the Apr/May average. Real growth is worse for spending ex food and energy and for discretionary consumption (ex food, energy, rent, medical) (Chart 1).

Real spending ex food and energy is up less than 1% from October 2022, prior to the weather drop/rebound in Dec/Jan and is down 0.2% for real discretionary spending. The differences mainly owing to rent and medical spending (still in catch-up mode from Covid). This is hardly the picture of a robust consumer (Chart 2).

Inflation remains problematic versus 2%. Core PCE ex food and energy still averages north of 4% on a 3M basis, and likely comes in at 4.2% in Q2, Q/Q SAAR, versus 4.9% in Q1.

Even with slowing consumption I still think the Fed has not choice but to chase stock bubble with inflation too high.

The only thing that would change this is is shock downside employment report next week.

Thus I remain bearish AUD.