Overview

• The Commerce Department reported headline PCE up 2.7% year over year in August with core at 2.9%, as monthly gains registered 0.3% and 0.2%, respectively.
• Personal consumption expenditures rose 0.6% in August and personal income increased 0.4%, while the saving rate held at 4.6%, signaling resilient demand.
• Stock futures advanced, Treasury yields eased and the dollar slipped after the release, as CME FedWatch showed higher odds of a 25-basis-point cut in October.
• The Fed cut rates by 25 basis points last week to 4.00%–4.25%, and Chair Jerome Powell said inflation risks are tilted up even as employment risks tilt down, complicating the path for further easing.
• Economists said tariff pass-through to consumer prices has been limited so far, though newly announced duties could add pressure, even as Q2 GDP was revised up to a 3.8% annualized pace.