Group 1: Inflation Data - The PCE price index increased by 0.1% month-on-month in May, resulting in an annual inflation rate of 2.3% [1] - The core PCE price index, excluding food and energy, rose by 0.2% month-on-month and 7.7% year-on-year, slightly above expectations but still consistent with moderate inflation [1] - Economists anticipate that inflation may intensify in the coming months as businesses pass higher import tariffs onto consumers [1][6] Group 2: Consumer Spending - Personal consumption expenditures (PCE) fell by 0.3% after adjusting for inflation, marking the largest decline since the beginning of the year [3] - The decline in consumer spending is widespread and aligns with a drop in consumer confidence, attributed to uncertainties surrounding the Trump administration's economic policies [3] - Spending on motor vehicles decreased by 6%, reversing the surge seen in March and April as consumers rushed to purchase before tariffs took effect [3] Group 3: Income and Savings - Personal income experienced its largest decline since 2021 due to reduced government transfer payments, while wages increased by 0.4% for the second consecutive month [3] - The savings rate dropped to 4.5%, indicating that consumers may still have sufficient funds to continue spending despite the decline in income [3] Group 4: Federal Reserve Outlook - Federal Reserve Chairman Jerome Powell indicated that inflation is expected to rise in June, July, and August due to tariff impacts on consumer prices [6] - If inflation remains subdued, Fed officials may support interest rate cuts during the next policy meeting scheduled for July 29-30 [6] - Market predictions show a 77.3% probability that the Fed will maintain interest rates in July, with a 22.7% chance of a 25 basis point cut [7]

Core Insights - The central bank of Malaysia indicates that consumer spending continues to expand, contributing to a stable and low inflation rate [1] Economic Indicators - Consumer spending is on the rise, suggesting a positive outlook for economic growth [1] - The inflation rate remains low and stable, which is favorable for maintaining purchasing power and economic stability [1]

Group 1 - The core inflation indicator, the April core PCE price index, rose by 2.5% year-on-year, matching expectations and slowing from a revised previous value of 2.7%, marking the smallest increase in over four years [2] - The overall PCE price index increased by 2.1% year-on-year in April, falling short of the expected 2.2% and the previous value of 2.3% [3] - Personal spending showed a significant slowdown, with real personal spending growing only 0.1% month-on-month in April, down from a 0.7% increase in March [4] Group 2 - Despite the slowdown in consumer spending, personal income remained strong, increasing by 0.8% month-on-month, the largest increase since January 2024, exceeding the expected 0.3% [6] - The savings rate rebounded strongly to 4.9%, the highest level since April 2024, due to income performance outpacing spending [11] - The "super core inflation indicator," which excludes housing and energy costs, also fell to its lowest level in four years, with a notable decrease in service costs, particularly in financial services and insurance [5] Group 3 - The consumer spending data indicates growing anxiety among American consumers regarding the economic outlook, with confidence in personal financial prospects dropping to historical lows [5] - The trade policy fluctuations have increased market uncertainty, with economists closely monitoring the extent to which higher import tariffs are passed on to consumers [9] - Retailers, including Walmart and Macy's, have indicated that consumers will soon see price increases due to the impact of tariffs [9]

Core Viewpoint - The Federal Reserve's Barkin indicates that consumers have begun to expect rising inflation, which is affecting market sentiment; however, there is currently no evidence that this has led to a decrease in consumer spending [1] Group 1 - Consumers' expectations of rising inflation are influencing market sentiment [1] - There is no current evidence suggesting that inflation expectations have resulted in reduced consumer spending [1]

Core Viewpoint - The President of the Richmond Federal Reserve, Barkin, emphasizes that individuals are exercising patience in their investment decisions due to policy uncertainty [1] Group 1 - There is no evidence indicating that declining sentiment is affecting consumer spending [1]

Core Viewpoint - The Bank of Japan's policy board member, Toyoaki Nakamura, suggests that rushing to raise interest rates may negatively impact consumer spending, indicating that maintaining policy stability is currently appropriate [1] Group 1 - The urgency to increase interest rates could lead to a decline in consumer expenditure [1] - Maintaining a stable policy is deemed suitable at this time [1]

Market Overview - The three major U.S. stock indices experienced declines last week, with the Dow Jones down 0.16%, the S&P 500 down 0.47%, and the Nasdaq down 0.27% [2][3]. Economic Indicators - This week, the U.S. will release the Consumer Price Index (CPI) for April, which will provide insights into the latest inflation trends [4]. - The April retail sales data will also be published, indicating whether consumer spending remains robust [5]. Federal Reserve Actions - On May 8, the Federal Reserve announced that it would maintain the federal funds rate target range at 4.25% to 4.50%, marking the third consecutive decision to keep rates unchanged [3]. - Federal Reserve Chairman Jerome Powell is scheduled to discuss monetary policy assessments on May 15, coinciding with the release of retail sales data [5]. Corporate Earnings - The earnings reports for the first quarter are ongoing, with retail giant Walmart set to release its financial results before the market opens on Thursday [5]. - Chinese concept stocks, including Alibaba, are also expected to announce their latest performance this week [5].

Economic Data Summary - The US GDP for Q1 2025 decreased by 0.3% on a year-over-year basis, marking the first negative growth since Q2 2022, contrasting sharply with a 2.4% growth in Q4 2024 [1] - The decline in GDP raises concerns about the future trajectory of the US economy, with significant fluctuations noted [1] Reasons for Economic Decline - Increased imports due to tariff policy expectations have disrupted the domestic economic balance, as companies rushed to import goods to avoid future costs [1] - Weak consumer spending, driven by slow income growth, rising prices, and low consumer confidence, has directly impacted economic growth [1] - Reduced corporate investment due to uncertainty in the economic outlook has negatively affected both individual companies and overall economic growth [1] Market Reactions - Following the disappointing economic data, US stock indices fell sharply, with the Nasdaq index dropping as much as 3% before recovering slightly [2] - Investor panic led to significant stock sell-offs, reflecting a prevailing sense of fear in the market [2] Federal Reserve's Influence - A sudden dovish signal from Federal Reserve officials regarding potential early interest rate cuts provided a boost to the market, leading to a dramatic recovery in stock prices [3] - The Nasdaq index managed to narrow its losses to just 0.09%, while the Dow Jones index turned positive with a 0.35% increase [3] Investor Sentiment - The volatility in the market has tested investor psychology, particularly affecting retail investors who sold off stocks during the early downturn only to miss out on subsequent gains [3] - The situation highlights the complexities and uncertainties inherent in financial markets [3]

Core Insights - The U.S. economy experienced a contraction in the first quarter of 2025, raising concerns about a potential recession as President Trump's second term begins [1] - Some Wall Street economists have revised their GDP forecasts to negative growth due to unexpected increases in imports driven by inventory accumulation by businesses and consumers [1] - Imports negatively impacted GDP by over 5 percentage points, while exports grew by 1.8% [1] Economic Indicators - Personal consumption expenditures grew by 1.8%, marking the slowest quarterly growth since Q2 2023, down from 4% in the previous quarter [1] - Private domestic investment saw a significant increase of 21.9% [1]