About those rate cuts.

They aren’t coming. Not from the Fed. Not soon.

The advance read on Q1 US GDP, delivered on Thursday, was accompanied by a very warm core PCE print: 3.7% versus 3.4% expected, up from 2% during the prior two periods.

That’s concerning enough on its own, but when you drill down to the “supercore” measure the Fed’s using to benchmark disinflation progress, the picture’s even more worrisome.

As the figure shows, supercore price growth (i.e., core services excluding housing) ran above 5% last quarter.

If you’re a policymaker and that’s the measure you really care about (as opposed to just saying you care about it), then rate cuts are off the table until further notice.

The market’s aware. Pricing for Fed cuts in 2024 receded to just ~34bps — so, one quarter-point cut with less than even odds of a second. Remember: That pricing was nearly 175bps in January.

The cash curve bear flattened in the wake of the GDP release. Twos were north of 5% on Thursday morning in the US.

As the familiar figure above, updated for Thursday, suggests, stocks may have a gravity problem.