Latest / Markets with Megan: A Quick Financial Markets Update / Savings Decline, Credit Rises in September Core PCE Report | Episode 186 | 10-31-24

Transcript

Savings Decline, Credit Rises in September Core PCE Report | Episode 186 | 10-31-24 · Markets with Megan: A Quick Financial Markets Update

• 0:01
  Megan Horneman: Well, inflation wasn't as expected today and it's taken some steam out of this equity rally that we've seen.
• 0:07
  Megan Horneman: It is Thursday, october 31st and we got the reading this morning on CorePCE for the month of September, and CorePCE is another inflation indicator, but it's the Fed's preferred inflation indicator because it isn't as volatile as the CPI and its makeup, its consistency, is a little bit different than CPI.
• 0:26
  Megan Horneman: So let's dig into what we saw here.
• 0:29
  Megan Horneman: We did see on the month over month basis for the core reading.
• 0:33
  Megan Horneman: It was its biggest jump that we've seen since April, at 0.3%, and the prior month was also revised higher.
• 0:40
  Megan Horneman: What drove this higher was basically services, and we've been talking about the service.
• 0:45
  Megan Horneman: Inflation is sticky and it's problematic for the Fed.
• 0:48
  Megan Horneman: It was healthcare costs and we also did see which has not been the case in recent months some increases in goods prices.
• 0:56
  Megan Horneman: We saw increases in clothing, cars, furnishings, household equipment.
• 1:01
  Megan Horneman: These are things that consumers have been less inclined to buy, but they're back at the table now, buying these goods-related items, which again is inflationary On the year-over-year level.
• 1:13
  Megan Horneman: This is what the Fed's going to look at.
• 1:15
  Megan Horneman: Core PCE rose 2.7%.
• 1:17
  Megan Horneman: It matched last month's rise, but it was slightly higher than the expectation.
• 1:22
  Megan Horneman: The other thing that we're monitoring that we got today was that personal savings rate, because the personal savings rate now it's basically that we saw it's a year to date low.
• 1:35
  Megan Horneman: It's well below its historical average and we're seeing that consumers now they're using credit cards so much and now they're dwindling their savings to continue to spend money.
• 1:44
  Megan Horneman: This is just not sustainable in our view, especially since the Fed's going to have to look at some of these inflation indicators and say, well, maybe we can't cut interest rates the way that the market is expecting, so we're seeing that market reaction today.
• 1:58
  Megan Horneman: Equities have been weak, bond yields have been shifting slightly higher.
• 2:01
  Megan Horneman: This is all to reflect this environment where consumers just won't stop spending and now it's creating, possibly, this stall in the progress on inflation, and that's all we have today.
• 2:12
  Megan Horneman: If you like this podcast, you can subscribe to it.
• 2:15
  Megan Horneman: Hit the alarm bell If you could share this with friends and family as well.
• 2:19
  Megan Horneman: And if you want a history of our podcast, please go to marketswithmeganfm.
• 2:23
  Megan Horneman: Thank you.