Overview

• Official data show headline PCE inflation at 2.6% year over year in July, with core PCE at 2.9% and monthly gains of 0.2% and 0.3%, respectively.
• Inflation pressures were concentrated in services, up 3.6% from a year earlier, while core goods were flat on the month, underscoring sticky services costs.
• Consumer spending rose 0.5% in July and personal income increased 0.4%, signaling still‑firm demand as the Fed weighs policy options.
• Fed funds remain at 4.25%–4.50%, and futures put roughly an 84%–87% chance on a 25‑basis‑point cut in September, with upcoming August jobs and CPI reports seen as key swing factors.
• Fed Governor Lisa Cook sought a court injunction to block President Trump from removing her, with a hearing set Friday that could affect Fed governance and her participation in the September meeting.