(Reuters) – The personal consumption expenditure (PCE) price index rose 0.2% in October, the Commerce Ministry said on Wednesday, matching unchanged gains from September.
In the 12 months to October, the PCE price index rose by 2.3, after rising 2.1% in September. Excluding volatile food and energy components, the PCE price index rose 0.3%, following a similar increase in September.
In the 12 months to October, core inflation rose 2.8%, after rising 2.7% in September. The US central bank follows the PCE price measures for monetary policy.
MARKET REACTION:
STOCKS: The S&P 500 edged lower, down 0.2%
BONDS: 10-year U.S. Treasury yields traded higher. The 10-year return was 4.2690% and the two-year return was 4.229%
FOREX: The dollar index fell 0.46%
NOTES:
DAVID ALCALY, LEAD MACROECONOMIC STRATEGIST, LAZARD ASSET MANAGEMENT, NEW YORK (via email)
“Today’s data should not change the view on the likely path for disinflation, however bumpy. But many observers, including likely some at the Fed, are looking for reasons to become more aggressive on the outlook given the potential for inflationary policy changes like new rates.”
DAVID RUSSELL, GLOBAL HEAD OF MARKET STRATEGY, TRADESTATION, CHICACO (via email)
“December remains in play, but further rate cuts in 2025 are fading as policy moves closer to neutral. Inflation is becoming less of an issue as investors shift to cyclical growth. The economy and the stock market simply don’t require super low interest rates anymore. 2.5 to 3 percent PCE might be good enough for now. Trade and tax policies are likely to be more important than monetary policy in the future.”
PETER CARDILLO, CHIEF MARKET ECONOMIST, SPARTAN CAPITAL SECURITIES, NEW YORK
“This was not earth-shattering news for the markets. We all expected inflation to rise a bit, but inflation is not out of control. And that is the key.”
“This paves the way for a 25 basis point cut in December and likely a pause after that. But the pause will likely not be due to inflation data, but to uncertainties about Trump’s tariffs. I think the Fed will become cautious.”
“These figures suggest that inflation continues to move in the right direction. There may be occasional dips, but that is what the market expected. I think the report is good news.”
(Compiled by the Global Finance & Markets Breaking News team)
