The Fed's favorite inflation gauge, the annual Core PCE, was unchanged in September at 2% while month over month saw a rise of 0.2%, just above the 0.1% expected. Inflation pressures have remained contained and the Federal Reserve will have to look closely at future inflation data ahead of the December Federal Open Market Committee meeting. Remember, the Federal Reserve has forecasted Core PCE to run near current levels through 2021. If that forecast is accurate, long-term rates like mortgages, can't move too high.
Consumer spending rose in September, a good sign that Americans have the confidence in the economy and the job market to continue to spend their hard-earned dollars. Personal Spending rose 0.4% in September, above expectations while August was revised higher. That is a positive sign heading into the holiday shopping season as retailers look to ring up brisk sales in a strong U.S. economy.
U.S. Stocks begin the final days of October higher though the month has seen the Dow, S&P and NASDAQ fall from the all-time highs hit in September. The Dow Jones Industrial Average has declined 6.5% in October, the S&P has fallen 9% while the tech heavy NASDAQ is down 11% due in part to tariff issues, geopolitical headlines, mixed earnings in the industrial and tech sector along with profit taking. However, the U.S. economy remains strong and Stock market corrections, when prices are at all-time highs, are normal and healthy.