📍 September PCE comes as no surprise, high chance the Fed will cut rates next week

🔸 Headline PCE increased +2.8% YoY, matching the forecast and higher than August’s +2.7%. Month-over-month, #PCE headline +0.3% MoM (unchanged).
🔸 Core PCE stands at +2.8% YoY, slightly below the +2.9% forecast and last month; MoM remains at +0.2%.
🔸Goods prices didn’t increase much, services contributed the most: +0.246%, higher than August’s +0.238%.
🔸Supercore PCE (services excluding housing and energy) eased to +0.22% MoM and +3.26% YoY. However, the Financial services & insurance segment rose +0.852% YoY—marking the third consecutive month of strong increases.

-> Inflation has dropped sharply from its 2022 peak but has been stuck in the 2.5-3.0% range for nearly a year and seems unable to fall further. There’s no evidence that tariffs are pushing up goods prices. The entirety of inflation pressure is in services.

🔸 Income rose +0.4% MoM, higher than forecast and matching August.
🔸 Spending +0.3% MoM, holding steady.
🔸 Savings rate remains at 4.7% DPI—the lowest since late 2024

-> The income and spending data aren’t too bad, but they don’t provide anything new for the Fed to rely on.

📍September PCE met expectations and didn’t cause volatility. There’s not much else to say, but since the U.S. government shutdown, this data is already outdated and has little meaning for the market. I think the #Fed will still cut rates next week.