June 25: Soft PCE Twist Steepener

Research evidence excerpt

June 25: Soft PCE Twist Steepener

Update

June 25, 2026 11:25 PM GMT

Morgan Stanley & Co. LLCMGlobal Macro Commentary | North America Molly Nickolin

Strategist

June 25: Soft PCE Twist Molly.Nickolin@morganstanley.comLingdi Xu +1 212 761-3592

Economist

Lingdi.Xu@morganstanley.com +1 212 761-2957

Steepener Sofia Palacios

Sofia.Palacios@morganstanley.com +1 212 761-0428

Soft PCE cooled hike bets; AI suppliers outperformed spenders;

Morgan Stanley Asia Limited+

oil rebounded on Hormuz tensions; EM FX recovered; DXY at Gek Teng Khoo

101.42 (-0.2%); US 10y at 4.39 (+0.0bp). StrategistGek.Teng.Khoo@morganstanley.com +852 3963-0303

A benign monthly inflation print supported the front end, but stronger activity Morgan Stanley MUFG Securities Co., Ltd.+

data and renewed oil risks left the long end and risk assets more mixed. Hiromu Uezato

Developed Markets Hiromu.Uezato@morganstanleymufg.com +81 3 6836-8431

Morgan Stanley India Company Private Limited+

• US rates twist-steepened as a softer-than-expected May headline PCE Nimish M Prabhune

print led investors to modestly pare Fed tightening expectations, while Strategist

Nimish.Prabhune@morganstanley.com +91 22 6996-1862

firmer activity data and renewed strength in oil limited gains further out

the curve (2y: -2bp; 10y: unchanged; 30y: +2bp). Headline PCE rose 0.4% Morgan Stanley & Co. International plc+

Maria Chiara Russo m/m versus expectations of 0.5%, while core PCE increased 0.3% m/m, in

line with consensus. Personal income and spending both surprised to the Maria.Chiara.Russo@morganstanley.com +44 20 7677-3499

upside, initial jobless claims declined to 215k, and core durable goods orders

remained firm, reinforcing the view that underlying economic activity

continues to hold up despite easing inflation pressures.