PCE inflation data came in weaker than expected with July revised down 30bps, pushing Treasury yields to multi-year highs (10Y at 5.30%, 30Y at 5.64%).
Macro & Markets ·
US core PCE inflation declined to 3% on a year-over-year basis in August, undershooting analyst forecasts of 3.3% and marking the lowest reading since February, according to official data. On a monthly basis, core PCE rose 0.2%, also beating the anticipated 0.30% increase. The prior month's figure was revised downward to 0.1% from an initially reported 0.20%.
The softer-than-expected readings arrive amid broader shifts in how inflation metrics are calculated. The US methodology for core PCE was adjusted to account for changes in how certain service categories—portfolio management, software, and legal services—are measured, a revision that has the potential to reduce reported core PCE by as much as 20 basis points.
Whether this month's undershoot reflects genuine disinflation momentum or partly stems from calculation adjustments remains to be clarified in coming months, particularly as the focus on monthly momentum persists.