U.S. consumer spending increased in August, but underlying inflation moderated, with the year-on-year rise in prices excluding food and energy slowing to below 4.0%. With gasoline price surging, inflation as measured by the personal consumption expenditures (PCE) price index rose 0.4% in August after climbing 0.2% in July. In the 12 months through August, the PCE price index advanced 3.5% after rising 3.4% in July.
The market has finally heard Fed Chairman Jerome Powell’s warning: Reducing inflation to 2% is hard, and more interest-rate hikes might be needed.
(Reuters) -Fiscal concerns and worries over a prolonged period of elevated interest rates sent government bonds tumbling in the third quarter, and some investors believe more weakness is in store. U.S. government bond yields ended September with their biggest quarterly rises in a year, disappointing fund managers who were hoping for relief from the historic losses bonds suffered in 2022, when the U.S. Federal Reserve and other central banks raised interest rates to contain surging inflation. While bond yields - which move inversely to prices - appeared to be topping out earlier this year, renewed hawkishness from central banks has sent them soaring again in recent weeks.