After a banner Q1 for risk assets, the second quarter was poised for a constructive start amid decent data out of China and the notion, true or not, that a favorable read on the Fed’s preferred price gauge published late last week should be sufficient to dispel inflation concerns tied to a pair of CPI overshoots.

In China, private sector PMI figures appeared to confirm the message from official, government data released over the weekend.

The Caixin manufacturing gauge printed 51.1 for March in data out Monday, marking a fifth consecutive expansionary print, the longest such streak since 2021.

I’m instinctually skeptical that the Chinese economy can rebound durably in the absence of meaningful, concerted fiscal support aimed specifically at reviving consumption, but for now, markets’ll take whatever they can get.

The story this week is that between improving exports and an apparently sturdy manufacturing sector, China has a foundation to build on, even as legacy drag from the property meltdown continues to weigh and lackluster consumer price growth testifies to moribund domestic demand.

New orders subindexes in the March PMI releases appeared to support guarded optimism. Still, Wang Zhe, an economist at Caixin, described persistent “downward economic pressures,” a tenuous employment situation, deflationary dynamics and “insufficient” demand in striking a cautious tone. None of those problems have been “fundamentally resolved,” Wang said.

Meanwhile, back at the ranch, it was all about the “cool” supercore PCE reading from Good Friday. The YoY pace on that aggregate is now 3.3%, matching the lowest since the onset of inflation in 2021.

“The latest PCE data supported our suspicion that January data had beginning-of-year effects that appear to have relented,” BNY Mellon’s John Velis said Monday. “Housing inflation is slowly but steadily cooling and goods inflation remains near 0%,” he went on, suggesting “Messrs. Waller and Powell, who are looking for a couple of months’ worth of disinflation to consider cutting, might be satisfied by the time June arrives.”

That’s the narrative that’s bolstering asset prices: Cuts are coming, June’s probably a lock and the cadence will be quarterly. So, cuts in June, September and December.

There’s obviously a tsunami of top-tier US data on the docket this week. Important as it is, I don’t see it changing the narrative, frankly.

It’s worth noting that gold hit (another) record on Monday, up around $2,265.

The rally since mid-February’s impressive, to put it mildly.

As usual, bulls cited a bevy of catalysts. Gold folks’ll tell you the stars are always aligning for the yellow metal.

Currently, the bull case says central banks are readying cuts, governments are hopelessly profligate, wars are raging and monetary authorities are buying.

That’s actually a standardized bull narrative for bullion. It applies pretty much all of the time.

While acknowledging gold’s usefulness as a portfolio hedge and while readily conceding that thanks to man’s primitive fascination with shiny things, gold has indeed made for a good inflation hedge over centuries, I’m compelled to remind you that it’s inherently worthless. And completely useless in conducting your day-to-day affairs. So, like Bitcoin. Except tangible. And shiny, of course.