US Data Downside

• US PCE inflation came in softer than expected, with headline up 0.4% and core 0.3% over the month. Core services ex-housing rose just 0.12%, the smallest gain in 12 months, a constructive sign on the stickiest part of inflation.
• US Q1 GDP was revised down to 1.6% annualised, with much of that (1.4ppt) coming from AI-related capex. Consumption is slowing and the savings rate has dropped to 2.6%, suggesting growth is leaning on a narrow base.
• US-Iran negotiations remain in focus, with reports of a tentative 60-day deal to extend the ceasefire, though Trump is yet to sign off. Hopes of a resolution and a reopening of the Strait have kept oil prices lower, with Brent around $94/bbl and WTI $89/bbl.
• Domestically, in April, household spending fell 1.1% over the month, below the -0.6% expected and reversing March’s strength. Annually it grew 4.9%, again undershooting the 5.5% forecast, pointing to a softening consumer, this, combined with earlier weakening jobs data has left less than one full RBA hike priced.