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The Federal Reserve's preferred inflation gauge held steady last month, data indicated Friday, adding another layer of complexity to the central bank's near-term outlook on price pressures and rate cuts.
The Bureau of Economic Analysis' PCE Price Index report for the month of November showed core prices rose at an annual rate of 2.8%, matching the October reading and Wall Street's consensus forecast forecast.
Core pressures, which strip away volatile food and energy prices, were up 0.1% on the month, compared with October's 0.3% gain and Wall Street's consensus estimate of 0.3%.
Markets focus on the core PCE inflation reading, which the Fed considers a more accurate representation of overall price pressures as it incorporates changes in consumer spending patterns.
The BEA's headline PCE inflation index quickened to an annual rate of 2.4%, topping Wall Street's estimate of 2.5% and the 2.3% pace recorded in October. Prices were up 0.1% on the month, the BEA said, following a 0.3% reading in October.
The BEA also noted that personal incomes for September rose 0.3%, slowing from the revised 0.7% pace in October. Spending accelerated 0.4% compared with the 0.3% advance over the prior month.
Bond yields easing
"Sticky inflation appeared to be a little less stuck this morning," said Chris Larkin, managing director for trading and investing at E*Trade from Morgan Stanley.
"The Fed’s preferred inflation gauge came in lower than expected, which may take some of the sting out of the market’s disappointment with the Fed’s interest rate announcement on Wednesday," he added. "Longer term, the Fed is still facing policy uncertainty from the incoming White House administration, so the odds still favor a pause on rate cuts in January."
U.S. stocks pared declines following the data release, with futures indicating a 33 point decline for the S&P 500 and a 145 point drop for the Dow Jones Industrial Average.
The tech-focused Nasdaq is called 195 points lower.
Benchmark 10-year note yields were 2 basis points lower at 4.526% following the data release, while 2-year notes eased 2 basis points to 4.261%.
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.31% lower at 108.074.
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