Core PCE inflation confirmed trend rates very similar to what Fed Governor Waller had indicated last week. That leaves inflation over the latest four months a little below the 2% PCE target and “supercore” inflation almost at target (although both a little stronger more recently). Whilst it shouldn’t be a massive surprise, it does at the very least keep the bar low, and possibly lower it still, for continued front-loaded cuts from the Fed on any even marginally dovish surprises in upcoming labor data.

• Core PCE inflation at 0.13% M/M was very close to the 0.14% that the Fed’s Waller had anticipated last week.
• It looks like a larger miss to the rounded 0.2 median estimate in the Bloomberg survey although as we’d noted the average of unrounded estimates we’d seen prior were 0.16 so it’s only a small miss more broadly.  
• July was essentially unrevised (0.158% M/M vs 0.161 initially), following an upward revised 0.22% M/M (initial 0.16) in June that was partly offset by a downward revision to a particularly soft 0.08% (initial 0.10) in May.
• That leaves a four-month run rate of 1.8% annualized (exactly in line with Waller’s somewhat cherry-picked estimate on CNBC), whilst more typical run rates are a little hotter at 2.06% for three months (up from 1.86 as of July, which had been 1.72 prior to revisions) and 2.4% for six months (down from 2.6%). The Y/Y inched higher from 2.65% to 2.68%.
• Core services non-housing appears to have driven that revision profile. It printed 0.158% M/M in Aug after 0.199 (initial 0.212) in Jul, a solidly upward revised 0.258 (initial 0.158) in Jun and downward revised 0.084 (initial 0.131) in May.  
• Latest supercore trends: 2.5% annualized for three months (from 2.2 in July), 2.8% for six months (from 2.8) and 3.3% Y/Y (from 3.2). Waller’s same four-month metric would yield just 2.1% for its lowest since mid-2020.