US Core PCE Firms Slightly But Matches Expectations

New York: The U.S. Commerce Department said on Friday its Personal Consumption Expenditures Price Index (PCE) rose 0.2% in July, versus the unrevised 0.3% rise in June and matched the estimate of economists polled by Reuters.

In the 12 months through July, PCE inflation increased 2.6% after climbing 2.6% in June. Stripping out the volatile food and energy components, the so-called core PCE Price Index increased 0.3% last month. That followed a 0.3% rise in the core inflation in June.

In the 12 months through July, core inflation advanced 2.9% after rising 2.8% in June. The Federal Reserve tracks the PCE price measures for its 2% inflation target.

Stocks: S&P 500 emini futures slightly pared declines and were down 17 points, or 0.26%

Bonds: U.S. Treasury yields briefly pared gains and the 10-year yield was last up 2.3 basis points at 4.23% and the two-year yield edged up 0.2 basis point to 3.637%

Forex : The dollar index held gains and was up 0.21% to 98.09

Brian Jacobsen, Chief Economist, Annex Wealth Management, Menomonee Falls, Wisconsin: "After two months in the dumps, spending on durable goods jumped in July, driven by autos. Real incomes excluding transfer receipts-a key recession indicator-showed a healthy advance in July. Peak tariff uncertainty in May and June weighed on jobs, spending, and incomes. Hopefully the relief in July can continue without too much permanent damage being done."

Michael Lorizio, Head of US Rates Trading, Manulife Investment Management, Boston: "PCE was basically in line with expectations. Between CPI and PPI and some smaller inputs from other economic indicators, the street and the more high-profile economists have gotten really good at being able to predict where core PCE should be coming in, so the actual release has become a bit less of an event just because of those other inputs that we see ahead of time."

Chris Zaccarelli, Chief Investment Officer, Northlight Asset Management, C Harlotte, NC: "You can check this off as one more risk to potentially derailing a cut in September. The inflation part of it, at least in this measure, is not going to do anything to reduce odds of a cut in September."

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