Announced this morning, Personal Income increased 0.2% in August, as expected and lower than the previous month which was impacted by social benefit programs. Personal Spending increased 0.8% in August, slightly higher than expected and a decent rebound from the revised figure from last month at negative -0.1%. The PCE Deflator, a measure of inflation, increased 0.4% in August and remains elevated growing at 4.3% on an annual basis. The Core PCE Deflator, which excludes food and energy prices, increased 0.3% in August and grew 3.6% on an annual basis, both slightly higher than expected. Overall, income retreats in August as stimulus wanes and spending increases rebounding from negative levels. The strength of the consumer will be key for economic growth in the months ahead given consumption comprises nearly 69% of GDP. Meanwhile, inflationary figures remain elevated and core levels are still well above the Federal Reserve’s 2% average target, emphasizing the importance of policy adjustments in the months ahead. In all, the 10-year US Treasury yield ticks slightly lower and equity futures are higher as we head into the market open.
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