News

(Reuters) - The personal consumption expenditures (PCE) price index climbed 0.2% in October, the Commerce Department said on Wednesday, matching September's unrevised gain.

In the 12 months through October, the PCE price index increased 2.3 after advancing 2.1% in September. Excluding the volatile food and energy components, the PCE price index rose 0.3%, after a similar increase in September.

In the 12 months through October, core inflation increased 2.8% after climbing 2.7% in September. The U.S. central bank tracks the PCE price measures for monetary policy.

MARKET REACTION:

STOCKS: The S&P 500 slightly extended lower and was off 0.2%

BONDS: U.S. Treasury 10-year yields ticked higher. The 10-year yield was 4.2690% and the two-year yielded 4.229%

FOREX: The dollar index was off 0.46%

COMMENTS:

DAVID ALCALY, LEAD MACROECONOMIC STRATEGIST, LAZARD ASSET MANAGEMENT, NEW YORK (via email)

“Today’s data shouldn’t change views of the likely path for disinflation, however bumpy. But a lot of observers, probably including some at the Fed, are looking for reasons to get more hawkish on the outlook given the potential for inflationary policy change like new tariffs.”

DAVID RUSSELL, GLOBAL HEAD OF MARKET STRATEGY, TRADESTATION, CHICACO (via email)

“December remains in play, but further rate cuts in 2025 are fading as policy gets closer to neutral. Inflation is fading as an issue as investors shift to cyclical growth. The economy and stock market simply don't require super-low rates anymore. 2.5 to 3 percent PCE might be good enough for now. Trade and tax policy will probably matter more than monetary policy going forward.”

PETER CARDILLO, CHIEF MARKET ECONOMIST, SPARTAN CAPITAL SECURITIES, NEW YORK

"This was no earth-shattering news for the markets. We all expected that inflation would pop up a little bit, but inflation is not getting out of hand. And that's the key.”

“This paves the way for a 25 basis point cut in December and then probably a pause. But the pause won't likely be due to inflation data, but because of uncertainties over Trump's tariffs. I think the Fed will grow cautious.”

“These numbers that suggest inflation continues to move in the right direction. There may be a blip from time to time, but that’s what the market expected. I think the report is good news.”

(Compiled by the Global Finance & Markets Breaking News team)