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.
The latest figures have now been published by the Bureau of Economic Analysis as part of the October personal income and
expenditures report. Core PCE inflation increased by +0.1% for the month, less than the +0.2% which had been expected but more than September’s flat result. On a 12-month basis, the core PCE inflation rate slipped for a second consecutive month, from September’s 1.7% to 1.6% in October.
Westpac described the result as “disappointing”.
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 1.62%, 10-year yields had increased by 3bps to 1.77% and 30-year yields ticked up 1bp to 2.19%.