Inflation moves in the right direction, but markets are still not out of the woods
Wall Street got some much-needed inflation data on Wednesday.
TL;DR
- August PCE price index rose 3.4% year-over-year, below the forecast of 3.7%.
- Core PCE (excluding food and energy) rose 3% year-over-year, also below expectations.
- Odds of an October rate hike decreased significantly following the inflation data.
- Private payrolls rose by 90,000 in September, exceeding forecasts.
- Strong employment data could lead investors to reprice the likelihood of another Fed rate increase.
- Some analysts believe the Fed has reason to wait with rate hikes due to cooler inflation.
- Others argue that resilient labor and GDP data suggest a rate hike before year-end is still likely.
- There is disagreement on whether August's inflation data shows actual progress or a stall in taming inflation.