Expectations on Bloomberg were for the Personal Consumption Expenditures (PCE) Core Deflator year over year to be 4.7%, with the "whisper" number for August at 4.8% (with the whisperers led by Nick Timiraos from The Wall Street Journal, believed by many to be the unofficial voice of the Fed). It came in a touch high at 4.9%, but just like European bonds largely held their own after a high eurozone Consumer Price Index of 10%, Treasuries are holding firm here -- a sign that so much is priced in.
Spending was better than expected this month but was ratcheted down last month, so take that with a grain of salt.
On the Core, for last month it was reduced from 0.1% to 0.0%, but the year-over-year number was revised upward, meaning they found other revisions in even earlier months (a sign of just how "accurate" these data points are).
Real personal spending has averaged 0% change for last two months - showing signs of the consumer slowing?
Remember, too, this is all as of end of August when the 10-year Treasury averaged 2.89% rather than the 3.5% it averaged this month (look at mortgage rates, credit spreads and auto loan levels and they all got worse in September).
The S&P 500 averaged 4,158 in August versus 3,868 in September, so any wealth effect should have hit the data.
I don't pay close attention to individual stocks, but I went to the transcripts of their earnings calls. Inventory as a constraint was mentioned a couple times back in the summer of 2021, and not at all in the most recent call.
The Manheim Used Car Index is likely to show a price decline year over year when the end of September data come out.
We get Michigan sentiment data, but it would be surprising if inflation expectations went higher.
With the AAII sentiment survey still 3:1 bears to bulls, the CNN Fear and Greed Index near extreme fear and the Invesco QQQ Trust (QQQ) Relative Strength Index, as one example, at the oversold point, plus high put to call ratios, I'm adding risk here - specifically U.S. equity risk. (It doesn't hurt that the pound and euro are off their lows from earlier this week).
By no means do I think we get a soft landing, but too much Fed-based negativity is priced in, and the data could start tilting toward lower inflation than the market (and Fed) have been fixated on.
I continue to believe the ultimate lows will be in a true risk-off scenario, where bonds rally while stocks fall, but I think for now both can limp into month-end and get some strength.
Good luck, stay small, and use options where you can.
