Episode summary
Daybreak Weekend: US PCE, Iceland Eco Conference, Australia CPI | Bloomberg Daybreak: US Edition
Bloomberg Daybreak: US Edition
· · 39 min · Hosts: Nathan Hager
Summary
US inflation is still expected to run hot when the PCE price index arrives Thursday, with Bloomberg Economics’ Stuart Paul forecasting 0.4% month-on-month headline PCE and a 3.8% year-on-year pace. He argued that spending remains resilient enough for the Fed to stay on hold, even as higher energy prices continue to squeeze households and keep core inflation too elevated for comfort.
The week ahead also features several earnings tests in tech and retail. Avalon's discussion centered on Salesforce, where investors want clearer evidence that second-half growth can reaccelerate despite AI-related margin pressure and a tougher contract environment. Dell faces a high bar as well, with investors watching AI server demand after a strong share-price run, while Abercrombie & Fitch, Gap and Dollar Tree offer a read on how consumers are holding up across price points.
Outside the US, speakers highlighted a central banking backdrop shaped by geopolitical shocks. The Reykjavík Economic Conference in Iceland is expected to focus on oil prices, tariffs, currency moves and how policy makers should respond when inflation rises as growth weakens. In Australia, Swati Pandi said CPI is likely to stay elevated, with housing and rents especially sticky and the RBA still facing the risk of more tightening.
Key takeaways
- Stuart Paul expects Thursday’s US PCE report to show 0.4% month-on-month headline inflation and 3.8% year-on-year, keeping the Fed on hold.
- Salesforce faces investor skepticism because AI spending may pressure margins while the company must prove second-half growth can reaccelerate.
- Dell’s stock has a high bar after a strong rally, and options imply an 11% move around earnings as investors weigh AI server demand.
- Swati Pandi said Australia’s inflation is still sticky, especially in housing and rents, and the RBA may need another hike.
- At the Reykjavík Economic Conference, panelists expect central bankers to focus on oil, tariffs, currencies and the policy tradeoff between higher inflation and weaker growth.
Notable quotes
“We're expecting about 0.4% month-on-month headline PCE inflation. That'll push the year-on-year PCE inflation rate up to about 3.8%”
“So the Fed can afford to wait. Uh it can afford to sort of keep its foot on the brakes a little bit”
“AI and future growth will definitely be top of mind for investors as Salesforce heads into that third quarter earnings report”
“the options data which currently at the moment is implying an 11% move after those results”
“So they they ought to be trying to support the economy through the shock, but they can't because they're worried about inflation”
How the episode opens
Bloomberg Audio Studios, podcasts, radio, news. This is Bloomberg Daybreak Weekend. Our global look at the top stories in the coming week from our Daybreak anchors all around the world. Straight ahead on the program, we'll look to some key economic data in the US along with more earnings in tech. I'm Nathan Hager in Washington. I'm Caroline Hetka here in London where we're asking how central banks should respond to growing global economic anxiety.
I'm Doug Krer looking ahead to the latest reading on consumer inflation for Australia. That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 1130 New York, Bloomberg 991 Washington DC, Bloomberg 929 Boston, DAB Digital Radio London, SiriusXM121, and around the world on Bloombergradio.com and the Bloomberg Business App.
Good day to you. I'm Nathan Hager. We begin today's program with some key economic data in the US.
The Fed's preferred gauge for inflation, the PCE price index comes out this Thursday along with April readings on personal income and spending. For more on the numbers and what they could mean for Fed policy, we're joined by Stuart Paul, US economist with Bloomberg Economics. Of course, we saw those hot April readings on consumer and producer prices.
Are the PCE numbers, do you think, going to be any different, Stuart?
Well, they're also going to be hot. We're expecting about 0.4% month-on-month headline PCE inflation. That'll push the year-on-year PCE inflation rate up to about 3.8% from 3.5% in March. So, still far too hot for comfort for the Fed, that's for sure.
Yeah. Um, is it just these elevated energy prices that are driving things uh for this index? — You know, even in the core, it's going to be hot. We're expecting core inflation to inch up to about 3.3% from 3.2% prior.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- us pce
- personal spending
- reykjavik economic conference
- australia cpi
- stocks for the week ahead
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Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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