Oracle gets clipped by Federal Government/Inflation, income, spending stats

Following on to what I wrote this morning about the rising risks of recession, in part due to the slowdown in government spending that is upon us, Bloomberg News reported about 45 minutes ago that “The US Department of Defense is terminating a plan to use Oracle Corp. software to manage its civilian workforce, citing cost cutting efforts and a project that is six years behind schedule and over budget by $280 million. The program, which was intended to streamline the department’s human resources information technology, was initially estimated to cost about $92 million for fiscal year 2025.”

Headline PCE in February rose by .3% as expected and the core rate was higher by .4%, one tenth above the estimate. Prices rose 2.5% y/o/y headline and 2.8% ex food and energy vs 2.5% and 2.6% in the month before respectively. Food prices were unchanged m/o/m after a .3% gain in January. Energy prices rose one tenth but after a sharp increase in the two prior months.

Service prices were up 3.5% y/o/y while goods prices were up by .4% y/o/y, higher for a 2nd month after a string of declines.

While the PCE gets hyped up and the core rate was above the estimate, with CPI and PPI already out weeks ago and flowing into this, the PCE inflation stat is rarely market moving when finally released at the end of each month as compared to CPI/PPI and Treasuries have barely budged in response with the 2 yr flat and the 10 yr yield actually lower by 2 bps since the release. Reason maybe explained below.