No improvement in rate of inflation in September

No improvement in rate of inflation in September

Oct. 27:

The Personal Consumption Expenditures price index rose 0.4% in September, the same increase seen last month. That was more or less as expected, but that’s not to say it was satisfactory. The core PCE price index, which excludes food and energy expenditures, was up 0.3%. That’s the largest increase since April. 

Year over year, the overall PCE price index was up 3.4% and the core index was up 3.7%, in line with expectations. Overall, prices of goods were up 0.9% year over year and prices for services rose 4.7%.

Some genuine improvement would have been welcome, but the bottom line is that there has been no change in the outlook. The chance of another rate hike early next year, while low, remains on the table.

Personal income was up 0.3% in September, but personal spending rose 0.7%. Except for July, that’s the largest spending increase since January.

Pending home sales rose 1.1% last month

Pending home sales were up 1.1% in September. Home sales rose in the Northeast, Midwest and South but fell in the West.

Employment data highlights next week’s calendar

The focus next week will be on jobs, culminating in the employment report that will be published Friday. There’s a Federal Open Market Committee meeting Wednesday. Those are always of interest, although target rates aren’t expected to shift.

State of the market

This morning, the Dow traded down and Treasury yields were down relative to Thursday morning.

Economic calendar

Tuesday, Oct. 31

  • S&P CoreLogic Case-Shiller Home Price Index
  • FHFA House Price Index
  • Employment Cost Index
  • Consumer Confidence

Wednesday, Nov. 1

  • ADP Employment Report
  • Construction Spending
  • ISM Manufacturing PMI
  • Job Openings
  • The FOMC concludes its meeting with a press release at 11 a.m. PST, and a press conference with Fed Chair Jerome Powell at 11:30 a.m.

Thursday, Nov. 2

  • Nonfarm Productivity/Unit Labor Costs
  • Weekly Initial Jobless Claims
  • Factory Orders

Friday, Nov. 3

  • Monthly Employment Report
  • ISM Services PMI

Treasury calendar

Thursday, Oct. 26

  • Yesterday’s $38 billion auction of seven-year Treasury notes resulted in a yield of 4.908%, with demand higher than at the previous such auction.

There are no auctions of Treasury notes or bonds the week of Oct. 30.

By Mike Kraft, Executive Director and Commercial Real Estate Treasurer for Commercial Banking

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