Fresh Inflation Data Brings No Surprises

The Bureau of Economic Analysis released its July compilation of Personal Consumption Expenditures this morning and the results came in about as forecasters expected. The headline PCE Index rose by 0.3% after June’s identical rise was revised to a 0.5% increase. That took the new year-over-year pace to 1% from 0.9% and that’s about what analysts were looking for. At the core level, without food and energy, the monthly rise was also 0.3% and that was a little below the pre-release estimate of 0.5%. Year-over-year, the core rate rose to 1.3% from June’s upwardly revised 1.1% while beating estimates of a move to 1.2%.

Also out this morning was the Census Bureau’s July report for Personal Spending and Personal Income. In today’s report, June’s 5.6% growth rate in Spending was revised to 6.2% while July’s 1.9% beat early estimates of 1.6%. For Personal Income, July’s rise of 0.4% was a nice turnaround from June’s decline of 1% and also beat estimates of another 0.2% slip. Inflation-adjusted Real Personal Spending rose 1.6% last month following June’s 5.7% jump after that measure was revised from 5.2%. Analysts were only expecting a 1.3% July increase. Keep in mind that pandemic related transfer payments are still skewing some of this data.

Also out today, Wholesale Inventories fell another 0.1% in July after June’s decline of 1.3% while Retail Inventories rose 1.2% in a big miss against a forecast of a 1.1% fall.

For investors perhaps still processing Mr. Powell’s speech yesterday, Treasury prices have moved up slightly but the Ten-Year’s yield is still north of 70 basis points at around 0.73% while the Long Bond’s drift to 1.50% remains in tact. Crude oil is little changed at $43 while gold has rallied about $25 to $1,955.