The Personal Consumption Expenditures (PCE) price index rose 0.1% in August, following an unrevised 0.2% rise in July, the Commerce Department said Friday. Economists had forecast a 0.1% rise in the consumer price index. In the 12 months to August, the PCE price index rose 2.2% after rising 2.5% in July.
The core PCE price index excluding the volatile food and energy components rose 0.1% after an unrevised 0.2% rise in July. In the 12 months to August, core inflation rose 2.7% after rising 2.6% in July. The US central bank tracks PCE price measures to achieve its 2% inflation target.
MARKET REACTION:
STOCKS: U.S. stock futures firmed a bit more and were up 0.16%, pointing to a steady opening on Wall Street.
BONDS: The 10-year U.S. Treasury yield fell to 3.762% and the two-year yield fell to 3.584%.
FOREX: The dollar index fell 0.3%.
COMMENTS:
BRIAN JACOBSEN, CHIEF ECONOMIST, ANNEX WEALTH MANAGEMENT, MENOMONEE FALLS, WISCONSIN
“Powell can breathe a small sigh of relief. After pushing for a 50 basis point cut instead of a more conventional 25 basis point cut, the data on personal income and spending supports up to Now, core inflation has been a little lower than expected, as have income and spending. Personal interest income has fallen for two straight months and will likely continue to fall as the trend continues. the Fed will reduce its interest rates. Interest charges will not decrease as quickly, which risks continuing to weigh on consumption. Real disposable income has barely stagnated. a certain breathing.”
PETER CARDILLO, CHIEF MARKET ECONOMIST, SPARTAN CAPITAL SECURITIES, NEW YORK
“Basically, these numbers confirm two things. On the one hand, inflation continues to fall and if you look at headline year-on-year inflation at 2.2%, we are not far from the Fed’s 2% target.”
“Personal income and spending were weaker than expected, another indication that the economy is slowing.”
“This is good news for the markets, in a way, and essentially indicates that the Fed will likely continue to cut rates, perhaps by another 50 basis points by the end of the year.
“The reason (for the muted reactions in index futures) is that it’s been a very strong week and, of course, you know that personal income and spending suggest that the economy is weakening, so you know that this could hold back traders.
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