Announced this morning, Personal Income decreased -1.0% in September, a larger drop than expected which continues to reflect the impact of fiscal programs. In addition, the Employment Cost Index, a measure of wages watched by the Federal Reserve, increased 1.3% in the third quarter, which is the highest reading ever for the index going back to the mid 1990’s. Personal Spending increased 0.6% in September, as expected and the previous month was revised higher. The PCE Deflator, a measure of inflation, increased 0.3% in September and remains elevated growing at 4.4% on an annual basis. The Core PCE Deflator, which excludes food and energy prices, increased 0.2% in September and grew 3.6% on an annual basis, both as expected. Overall, a decrease in personal income and an increase in spending in September; combined with a strong increase in labor costs in the third quarter. Companies have been commenting on increased costs, due to supply constraints, and difficulty in finding workers, which will both likely remain as issues in the coming months. The Federal Reserve should be on track for tapering asset purchases in the near future. In all, the 10-year US Treasury yield is little-changed and equity futures are lower as we head into the market open.
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