One of the US Fed’s favoured measures of inflation is the change in the core personal consumption expenditures (PCE) price index. After hitting the Fed’s target at 2.0% in mid-2018, the annual rate then hovered in a range between 1.8% and 2.0% through to the end of 2018 before dropping in the first quarter of 2019. It then hovered around 1.5% or just above it for some months before moving higher in the last few months.
The latest figures have now been published by the Bureau of Economic Analysis as part of the September personal income and expenditures report. Core PCE inflation was flat for the month, largely in line with expectations but less than August’s +0.1%. On a 12-month basis, the core PCE inflation rate slipped back from August’s 1.8% to 1.7%.
US Treasury yields finished the day a little higher and more so at the front of the curve. By the end of the day, 2-year yields had gained 4bps to 1.56%, 10-year yields had increased by 2bps to 1.71% and 30-year yields finished 1bp higher at 2.19%.