The Personal Consumption Expenditures (PCE) Index rose 3.4% in August, less than expectations for 3.7% — a level held for much of the summer. Excluding volatile energy and food prices, core PCE rose 3%, beating expectations for a rise of 3.3% and marking a drop from 3.3% in July. Month over month, core PCE inched down a tenth of a percentage point to 0.2% from July and better than expectations for 0.3%.
DB2
Odds of an increase in October were 50/50 prior to this data - which I think was way too Hawkish. It seemed very unlikely that they would raise rates so close to the election when they could easily wait and do so in November. Odds today are now 65/35 in favor of rates staying the same (which is still too Hawkish).
Not to be an El Demonio Downer, but the measuring stick was also changed.
"What’s different today is that the BEA also included changes of its methodology for three subcategories of the PCE price index. The first two slashed the “core services” PCE price index; and the third slashed the “core goods” PCE price index:
1. Portfolio management and investment advice services
2. Legal services
3. Computer software and accessories.
The year-over-year “core services” PCE price index was slashed by 34 basis points for July as a result of these methodological changes and other revisions, from an old increase for July of +3.69% year-over-year, to a new-and-improved increase for July of +3.35% year-over-year. And in August, based on this new methodology, the core services PCE price index also increased by +3.35%. Blue = old year-over-year inflation rates; red = new-and-improved year-over-year inflation rates:"
It is just Yahoo!
We are helping the USD appreciate and the Yuan depreciate. Days later, we vote- who knows?
