Overview
- The Bureau of Economic Analysis on Wednesday reported August PCE rose 0.3% month‑on‑month and core PCE rose 0.2%, with year‑on‑year core at 3.0%, below economists’ forecasts.
- BEA revisions to how it measures software, portfolio management fees and legal services lowered prior inflation readings back to 2021, making recent inflation comparisons smaller than earlier reports showed.
- Consumer spending surged 0.9% in August and second‑quarter GDP was revised up to a 2.2% annualized pace, signaling resilient demand even as consumer confidence fell to its lowest in more than a decade.
- Markets priced down the chance of an October Fed hike and shifted probability toward December, Treasury yields and the dollar moved intraday, and stocks briefly rallied on the cooler inflation read.
- Rising gasoline and diesel costs tied to the Middle East conflict and a sharp early reading of Spain’s September CPI near 5% keep upside inflation risks for the ECB and Fed and leave policy paths uncertain.