Wall Street Prices in at Least 1 Fed Rate Hike as May PCE Seen Accelerating

3 articles · Updated · NBC News · Jun 25

At least one Fed rate hike by year-end is now expected on Wall Street, with Thursday’s May PCE report seen as a key test of whether inflation reaccelerated.
May PCE is forecast to quicken from April as higher oil prices and stronger consumer spending keep pressure on the Fed’s 2% inflation target, which it has missed for five years.
Markets got a temporary reprieve Wednesday as oil hit new postwar lows and the 10-year Treasury yield fell 9 basis points, while Treasury Secretary Scott Bessent said inflation is moving back toward target.
Kevin Warsh’s stance remains the bigger uncertainty: despite last week’s emphasis on price stability, analysts say his new Fed task forces and easing war-related energy pressures could still support a more dovish path.
Stocks have already lost momentum, with the S&P 500 down about 4% from its record after a 16% April-May rally that left valuations stretched and more vulnerable to higher-rate signals.

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NBC News6h ago

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2026 Inflation Surge: PCE Report, Fed Hawkish Pivot, and Global Economic Risks

Overview

Financial markets are closely watching the upcoming May 2026 PCE inflation report, as analysts expect it to reflect the lingering effects of earlier oil price increases, despite a recent US-Iran agreement that has started to lower energy costs. While lower oil prices may ease inflation pressures in the future, the May data could still show higher headline inflation due to past energy spikes. If this rise is mainly from energy, market reactions may be mild, but if core inflation also climbs, it could prompt a stronger response from the Federal Reserve. This highlights how recent geopolitical events and energy trends are shaping inflation expectations and policy decisions.

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