• US core PCE inflation shows stickiness as expected
• 25bps rate cut likely in December but a pause could follow
• S&P 500 takes a breather near record high 

The Fed’s preferred inflation measure, the core PCE index which excludes food and energy prices, matched analysts’ expectations, remaining unchanged at 2.8% y/y versus 2.7% y/y registered in September.

The monthly change also met expectations for a steady increase of 0.3% for the second consecutive month, though this is still higher than the 0.17% monthly increase, which could align with the Fed’s goal of maintaining price stability around 2%.

In other indicators, personal income and consumption clocked in higher than forecast at 0.6% m/m and 0.3% respectively.

Interestingly, although the figures suggest that the final battle against inflation might be tough, a 25bps rate cut in December remained a favorable scenario for the next FOMC meeting in December, with the probability rising to almost 70%.

Perhaps another rate cut would not be unreasonable before a period of steady interest rates takes place once Trump’s takes office in January. This may be one reason for the negative reaction in the S&P 500 index, which is currently crossing below the 6,000 round level after printing a new record high of 6,025.