Overview

• The BEA reported headline PCE up 0.3% in August and 2.7% year over year, with core PCE up 0.2% on the month and 2.9% on the year, all in line with expectations.
• Consumer spending rose 0.6% in August and personal income increased 0.4%, underscoring resilient demand even as inflation stays above target.
• Market pricing leaned toward another 25-basis-point cut next month, with stock futures higher and Treasury yields slightly lower after the report.
• The Fed lowered rates by 25 basis points last week to a 4.00%–4.25% target range, citing a weakening labor market.
• Officials flagged a policy tradeoff as Chair Jerome Powell noted upside inflation risk and downside employment risk, with tariff effects showing limited pass-through so far but still under review.