Vikas Patel

Kevin Warsh is off to a rocky start just two meetings into his tenure as Fed chair. He has refused to provide a framework for how monetary policy should operate, and he has lost both the hawks and doves on the rest of the Committee. The signal for where rates are going will come from his colleagues.

Composite Activity rose ~0.07σ to +1.18σ since July 28.

Month-over-month Core PCE came in at 13bps in June, three basis points below our nowcast of 16bps. Headline came in at -11bps vs our -10bp nowcast. Our errors primarily stemmed from Supercore (core services ex-housing), while our nowcasts for core goods and housing came in right in

Composite Activity rose ~0.05σ to +1.11σ since July 16

Composite Activity rose ~0.1σ to +1.07σ since July 6 — retail sales and regional Fed surveys drove it.

Composite Activity fell ~0.1σ to +0.98σ since June 29 — the June jobs report drove it, with prime-age EPOP down 0.6pp.

The BEA will make three changes to how it measures price change for portfolio management, computer software and accessories, and legal services in PCE. On net, these changes would likely lower current PCE inflation readings.

Composite Activity held at +1.1σ since June 18. 1Q2026 GDP was revised up to +2.1%, but consumption was revised down to +0.5% and private final demand to +1.7%. Mfg restocking still strong, AI capex anchors the cycle; regional Fed hiring broadened. 2-3 hikes from October remains base case.