US PCE inflation index miss not enough to trigger 50bp November rate cut

We are still yet to see signs of mass layoffs in the US economy that would warrant undue concerns over the health of the country’s jobs market.

Thursday’s initial jobless claims figures provided another pleasant surprise, dropping to 218k in the week to 20th September (from a revised 222k). Durable goods orders also beat estimates (+0.5% vs. 0.1% estimate once transportation is excluded), while pending home sales rose 0.6% in the month to August (+0.3% estimate).

A handful of Fed members spoke on Thursday, but there were very few remarks on monetary policy, with chair Powell failing to touch on either US rates or the economy during his communications.

Today’s PCE inflation report is up next, although even a fairly sizable miss here would not be enough for us to start pencilling in another 50bp cut from the Fed in November.