Rick Santelli: Core PCE Hits 3.3% as Durable Goods Surge 7.9% in April

Core PCE year over year came in at 3.3%, matching expectations, after rising from 2.61% in April 2025 to 3.29% in April 2026. Services inflation held around 3.49% year over year for four months. The quarterly core PCE reading was 4.4%, the warmest since the first quarter of 2023, increasing pressure for the Fed to delay or slow rate cuts priced by markets. Durable goods posted a headline gain of 7.9%, far above expectations of 4%. Ex-transportation durable goods fell to 1.1%, still more than double expectations, suggesting stronger underlying demand from businesses.

"Core PCE year over year expected 3.3 comes out at 3.3. Last look was 3.2. The April reading landed exactly on consensus, which sounds tame until you notice the direction. Core PCE has climbed from 2.61% in April 2025 to 3.29% in April 2026, and the BEA's monthly tables show services inflation hanging at 3.49% year-over-year, basically where it has been for four months."

"The last number core PCE quarter over quarter comes in at 4.4. That's a little bit hotter than we're looking for. And that would be the warmest since the first quarter of 2023. A 4.4% quarterly core print forces the Fed to slow-walk the cuts the market has been pricing in. JP Morgan's 2026 outlook had already flagged this risk, noting that markets had priced in roughly 80 basis points of rate cuts through 2026 while Fed officials are as concerned about upside risk to inflation as they are to unemployment."

"On the durable goods headline number comes in at 7.9%. This is a whopper of a number. We're expecting 4%. 7.9 would be the best since the last huge number, which was over 16% in may of 25. Aircraft orders distort this series violently, so the ex-transportation cut matters more for trend."

"Once you strip out transportation, it falls to 1.1. Yes, a big drop from 7.9 to 1.1, but 1.1 still more than double what we were expecting on ex transportation. Businesses, in other words,"

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