INSTANT VIEW-US PCE matches expectations in August

By Chuck Mikolajczak

NEW YORK, Sept 26 (Reuters) - The U.S. Commerce Department said on Friday its Personal Consumption Expenditures Price Index (PCE) rose 0.3% in August, versus the prior 0.2% rise in July and matched the estimate of economists polled by Reuters.

In the 12 months through August, PCE inflation increased 2.7% after climbing 2.6% in July. Stripping out the volatile food and energy components, the so-called core PCE Price Index increased 0.2% last month. That followed a revised 0.2% rise in the core inflation in July.

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

MARKET REACTION:

STOCKS: S&P 500 E-mini futures EScv1 rose and were up 23 points, or 0.35%.

BONDS: U.S. Treasury yields slipped and the 10-year yield US10YT=RR was last off 1 basis point at 4.164% and the two-year yield US2YT=RR shed 1.6 basis points to 3.647%.

FOREX: The dollar index =USD weakened and was off 0.14% to 98.36.

COMMENTS:

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

“Bottom line is that inflation remains sticky, but it’s showing no signs of accelerating that would hinder the Fed from at least cutting one more time before year-end. And that's taking into consideration that most of the macroeconomic indicators were a bit stronger than expected, in terms of personal income as well as consumer spending.

“It's good news for the markets. We're seeing yields come in a little bit, we're seeing the dollar a little bit lower, but that of course could be due to the new tariffs that were announced by President Trump.

“As I said, I think today's inflation news says that will get one more rate cut. Two rate cuts, that’s probably a coin toss now.”

KIM FORREST, CHIEF INVESTMENT OFFICER, BOKEH CAPITAL PARTNERS, PITTSBURGH:

"The big question is if the Fed still going to be overweighted on concern about employment or does it think it needs to, once again, pay more attention to inflation.

"I think because the numbers were perhaps a little hotter than anticipated, but not anything outstanding, the Fed is probably still going to look at next week's numbers to see how the labor market's holding up. I think labor markets are more important to the Fed."