PCE's soft 3.0% core is a BEA re-benchmark, not disinflation; the real economy just got hotter
The August core PCE read of 3.0% year over year looks like a clear win for the disinflation camp. It is not. The decline is largely a bookkeeping artifact of the BEA's annual index revision, and the same release carried a hotter real economy that argues against complacency. The market understood both parts: it trimmed October hike odds to roughly 38% from 51%, yet left the 10-year Treasury near 5.26% last night and about 5.29% live this morning, close to 24-year highs. Investors did not buy the soft print as evidence of a resolving inflation problem, because the evidence says the problem is intact and the real side of the ledger just strengthened.
Key Takeaways August core PCE printed 3.0% ye…
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