PCE (+0.4%) came in slightly higher than consensus (+0.3%.)  Core PCE was in line with expectations at +0.3% MoM and 3.7% YoY. Personal spending (+0.7%), however, was well above consensus (0.5%, 0.4% prior) and personal income (0.3%.)

In other words, spending increased faster than income. As discussed yesterday, this speaks to a slowing nominal inflation rate in the face of already high prices that are pinching those whose savings are depleted.

Yesterday, ES nailed our 4153 target from July……and has since bounced modestly on the PCE data and AMZN‘s earnings.

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GDP grew at a rapid 4.9% annualized clip last quarter, far outpacing most estimates and prompting a bounce in futures from overnight lows (after ES reached the top of the range for our next lower target.)

However, it merely complicates the Fed’s inflation fighting efforts.

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Powell spoke, and the algos weren’t too happy with what they heard:

“We are attentive to recent data showing the resilience of economic growth and demand for labor. Additional evidence of persistently above-trend growth, or that tightness in the labor market is no longer easing, could put further progress on inflation at risk and could warrant further tightening of monetary policy.”

Stocks tumbled again, closing in on our next downside target from last week.

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