In 30 seconds: US PCE inflation hit 3.5% in March 2026, the highest since May 2023, with core PCE at 3.2%, driving markets to fully price out Fed rate cuts for 2026 and sparking debate about potential rate hikes. The S&P 500 surged over 10% in April 2026 to record highs above 7,200, supported by strong seasonal patterns and broad earnings beats, though mega-cap tech stocks including Microsoft and Amazon sold off despite triple-play results. Brent crude experienced extreme volatility swinging between $111 and $126 in 48 hours amid the Strait of Hormuz blockade, driving US gasoline to record highs and prompting record US petroleum exports to supply-starved markets. US Q1 2026 GDP grew at a 2.0% annualized rate, slightly below estimates, with strong business investment led by AI spending, but consumer finances showed strain as the savings rate fell and real disposable income declined.
Headline PCE inflation came in at 3.5% year-over-year, the highest since May 2023, while core PCE hit 3.2%, a level not seen since Nov. 2023. Month-over-month, headline prices rose 0.66% and core prices 0.29%. The year-over-year headline number jumped 0.7 percentage points in a single month. Core PCE has now printed above the Fed's 2% target for 61 consecutive readings. At some point you stop calling that a bump and start calling it a feature. The components tell a consistent story. Core PCE goods prices ran at 2.8% over 12 months ended March, the highest since 2022, with the 6-month annualized rate at 3.6%. A year earlier, that same goods category was running at just 0.04%. Core services excluding housing printed 3.4%, up from 3.3% a year prior. The one bright spot: shelter disinflation continued in March, with shelter running at 3%, a slight undershoot of the prepandemic pace. Markets responded accordingly. The Fed left interest rates unchanged at its latest meeting, and the 2y Treasury yield rose 10bps to 3.94%. Traders have completely priced out rate cuts for the remainder of 2026, a reversal from the 3 cuts priced at the start of the year. They are now pricing in hikes in 2026. Gas prices have surged 44% over the last nine weeks to $4.30 per gallon, the highest since July 2022.
The S&P 500 closed at 7,209.01 on 2026-04-30, up 1.02% on the day and crossing above 7,200 for the first time. A year ago it sat at 5,600. Five years ago, 4,200. Ten years ago, 2,100. Compounding is relentless, and so, apparently, is the bid. The seasonal setup is friendly. The index has notched 11 new all-time highs in 2026, and as one market strategist observed, no year in history has ended with just 11. Good chance we see more. Beneath the headline, though, the texture is odd. Amazon $AMZN reported a triple play after the close, its second in four quarters, and traded lower anyway. Microsoft $MSFT fell 5% on earnings. You beat, you raise, and the market sells you. That is a particular kind of message. The rest of the tape was more cooperative. Since the prior close, 18 stocks raised guidance, 11 of them triple plays, against just 3 lowering. Quanta Services $PWR posted its first triple play since 2019, jumping 13.3%. Impinj $PI surged almost 16%. Viavi $VIAV gained 12% on its fourth straight triple play. TTM Tech $TTMI rallied 9.5% after its fifth straight triple play, snapping three consecutive negative earnings-day reactions. Iron Mountain $IRM reported its second triple play in three quarters. Even Cigna $CI, which posted its third triple play in the last three years, managed 0.5%. The market is rewarding execution.
The oil market has lost its mind. Brent crude swung from $111 to $126 in less than 48 hours, a span of crazy price volatility that settled, briefly, around $116. On a single session the expiring front-month Brent contract traded within a ~$13 range in absolutely no-news. That is not a market discovering a price. That is a market discovering it has no idea what anything is worth. The arithmetic behind the panic is straightforward. Gulf oil flows account for roughly 20% of global supply. Gulf oil flow cut off: 50%. Premium gasoline in Cleveland hit $6/gallon. Beef prices surged to a record $2.55 per lb, prompting demand switch to other meat forms, putting pressure on chicken, pork and lamb (and fish). Even the bond market is feeling it: hypersensitivity (high beta) to oil prices is finally providing relief on the way down, with yield on 10-year Gilts declining more sharply as crude retreated from its highs. Everything, it turns out, is an oil trade.
Initial jobless claims came in at 189,000, a 12.09% decline on the week, which is a large move for this series.
Here is what it costs to borrow money right now.
30-year fixed mortgage: 6.30%, up 7 bp on the week
15-year fixed mortgage: 5.64%, up 1.08% on the week
Auto loan rate (60-month): 7.52%, up 4.16% on the quarter
Credit card rate: 21.00%, up 0.14% on the quarter
Prime rate: 6.75%, flat on the day