This morning\u2019s PCE report for July offered little surprises relative to economists\u2019 estimates. The Fed\u2019s preferred inflation gauge, the core PCE, rose 0.2% month over month (m\/m), in-line with projections and June\u2019s reading. On a slightly more disappointing note, the figure rose 4.2% year over year (y\/y), also as expected, but higher than the 4.1% from the previous period. The headline, non-core PCE, depicts a similar development, accelerating from 3% in June to 3.3% in July. Looking under the hood, prices for goods accelerated their decline from -0.1% to -0.3% while services prices accelerated from 0.3% to 0.4%. <\/p>\n\n\n\n
Services inflation picked up steam as consumer spending rose 0.8% during the month, the fastest pace since January\u2019s 1.9%. July\u2019s spending numbers came in a tenth hotter than expectations and two tenths stronger than June\u2019s. To boost their spending power, however, consumers dipped heavily into their savings as personal income only rose 0.2% during the month, worse than forecasts calling for an unchanged reading of 0.3%. In fact, the personal savings rate dipped to 3.5% during the period, a sharp decline from June\u2019s 4.3% and the lowest level since November of last year. For comparison, the personal savings rate reached a cycle low of 2.7% in June 2022, the lowest level since 2005. <\/p>\n\n\n\n Across the Atlantic, August eurozone inflation came in at 5.3% y\/y, the same pace as the previous month. August\u2019s figure disappointed forecasters that foresaw progress pointing to inflation dropping to 5.1%. On a m\/m basis, prices rose 0.6%, a sharp reversal from July\u2019s -0.1% reduction. Core inflation did achieve progress, however, dipping from 5.5% to 5.3%, exactly as expected. Price pressures were boosted by energy, non-energy industrial goods, and processed food, alcohol and tobacco whose prices rose 3.2%, 0.6% and 0.3% m\/m, respectively. Unprocessed food and services did provide some relief, with the former\u2019s prices falling 0.6% while the latter\u2019s rose just 0.2%.<\/p>\n\n\n\n Also this morning, initial unemployment claims data fell below estimates, illustrating that while the pace of hiring and job openings is losing steam, employers aren\u2019t outright firing employees in aggregate. Initial jobless claims for the week ended August 26 totaled 228,000, short of predictions of 235,000 and lower than the previous week\u2019s 232,000. Continuing claims for the week ended August 19 did come in slightly higher than estimates, however, with 1.725 million claims exceeding both the 1.703 million anticipated and the 1.697 million from the previous week. Indeed, companies still have an appetite to earn returns and make money, even if tighter monetary policy and a tough economic environment challenge margins.<\/p>\n\n\n\n Certain companies are benefiting from embracing technology that is helping them capture market share as illustrated by the following:<\/p>\n\n\n\n Markets are cautiously trading in a tight range ahead of tomorrow\u2019s big payroll release. Equity indices are continuing their winning streak, with technology leading as the Nasdaq Composite Index rises 0.6%. Participation is mixed today with an offensive tilt, as the defensive health care, utilities and consumer staples sectors are all down on the session. Real estate, financials and energy are also down, with all other sectors higher. Bond yields are 2-3 basis points (bps) lighter on the long-end while the short-end is higher by 1-2. The dollar is getting bought up, with its Index up 52 bps to 103.71 as the greenback gains against the euro, pound sterling, and franc on concerns that ECB tightening on the back of a hot inflation reading will push the region into recession by year-end. WTI crude oil is on pace for its sixth-consecutive gain on concerns that Riyadh will extend its voluntary production cut for the third month in a row through October. <\/p>\n\n\n\n![\"consumers](\"\/campus\/wp-content\/uploads\/sites\/2\/2023\/08\/Picture3-7.png\")
<\/figure>\n\n\n\nCorporates Hold on To Labor<\/strong><\/h2>\n\n\n\n
Technology Supports Revenue and Earnings Growth<\/strong><\/h2>\n\n\n\n
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Equities Advance One Step at a Time<\/strong><\/h2>\n\n\n\n
All Eyes Look to Tomorrow<\/strong><\/h2>\n\n\n\n