Inflation

Summary Following today’s PPI release, we are updating our nowcast by +2bps to +34bps m/m and by −1bp to 3.09% for the y/y September core PCE reading (a correction to the 3.12% y/y figure in our earlier email). We maintain our base case that

In 2026, the Fed moved from an easing bias to a hold to a hike, catching up to the data with a lag at every stage. We look back at how (1) a bottoms-up read of inflation, (2) a careful reading of the labor market, and (3) close tracking of the full FOMC put us ahead of the hawkish turn.

Summary Core PCE came in at +25bps for the month-over-month July reading, a highly uncharacteristic 9 basis point miss. Our miss primarily stemmed from healthcare, airfares, and tax preparation services. We will be implementing improved nowcasting techniques next month and look forward to being back on track. A