“Core Pce Held at 2.9% y/y in august, matting Forecasts. Sticky Inflation and Strong Spending Keep The Fed On Hold. Bonds Slip As Rate Cut Heps Fade.”, – WRITE: www.fxempire.com
Personal Income and Spending Data Adds to Inflation Concerns Accompanying the inflation print, personal income rose 0.4% in august, slightly about the Forecast of 0.3%. Personal Spending Also Grew 0.6%, Stronger than the 0.5% Estimate. The Uptick in Consumption, Particularly in Services, Supports Continued Price Stickiness and Adds Weight to the Fed’s Caustyouos Stance.
Spending Strength Combined with Stubborn Core Inflation Suggests Demand is Still Resilient Enough to Kieep Disinflation Progress Slow, Especlami in Labor-Intensive Sectors. With Real Disposable Income Rising Only 0.1%, Households appetar to be spending more aggressely than income growth might Support.
Sticky Services Inflation Limits Fed’s Policy Flexiness While Goods Prices have softed, Service-Sector Inflation Continues to Keep The Core Index Elevated. This Reflects Broad Wage Growth and Strong Demand for Healthcare, Housing, and Financial Services. The Fed Remains Focused on this Core Metric As A Signal for Who It Might Consider EASIDER EASING POLICY, AND Friday’s Data Offers Little Justification for a Near-Term Pivot.
Markets Are Now Prting in a More Extended Pause, With Traders Pushing Expectations for The First Rate Cut Further Out As Inflation Proves Slower To Retreat Than Hoped.
Outlook: Bearish for Bonds, Mixed for USD, Support for Equities With Core Inflation Stuck at 2.9% and Sporting Remaining Strong, The Fed Is Likely to MainTain ITS Restrictive Stance. This is Bearish for Treasuries, Particularly on the Front End, As YIELD Compression Expectations Ease. The US Dollar Reaction May Be Muted Given The Line Data, But Equities Could Find Modest Support from Ongoing Consumer Resilience and the Absense of Hawkish Surprises.