Personal Consumptions Expenditures Price Index largely meets expectations

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Published Date 8/30/2024

Since Powell’s speech at Jackson Hole markets have waited for the Fed’s preferred inflation data, PCE, today it hit and was totally unchanged from the estimates. In a rather unusual response, there was no movement after the release at 8:30 am ET. Also at 8:30 am July personal income and spending were also in line, income did perk up to +0.3% slightly firmer than 0.2% forecasts, spending +0.5% as anticipated.

July month/month PCE +0.2% as expected, up from +0.1% in June, year/year overall +2.5% as expected; the core PCE month/month (ex-food and energy) thought to be +0.2% reported at +0.2% and unchanged from June, year/year +2.6% was unchanged from June, but the estimates were +2.7%. Based on the year/year data inflation declined 0.1%. When viewed on a three-month annualized basis core month/month +1.7%, the slowest this year.

Both data points continue to confirm the Fed will lower the FF rate next month, the lack of upside surprises maintained bets that the US central bank will deliver 100bps in rate cuts in its three remaining meetings this year. Presently traders remain betting that next month it will be just 25 bps.

At 9:30 am the DJIA opened +139, NASDAQ +116, S&P +29. 10 year note 3.87% unchanged, MBSs recently have been focusing more on the 2 year note than the usual 10 year note; this morning while the 10 year note is unchanged the 2 year note rate at 9:30 am +3 bps from yesterday, the 5.5 30 year FNMA coupon at 9:30 am -6 bps from yesterday’s close and -15 bps from 9:30 am yesterday.

At 9:45 am August Chicago purchasing managers index, expected at 46.4 reported at 46.1- not important, Chicago PM index as been in contraction most of this year.

At 10 am July University of Michigan consumer sentiment index thought to be at 67.9.

Source: TBWS

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