Topic Intelligence: diesel

The Fed's preferred inflation gauge, the personal consumption expenditures price index, showed core prices rose 3.3% annually in July, missing expectations for a 3.6% reading. The monthly print came in at 0.1%, in line with forecasts but signaling sticky underlying price pressures.

The data weakens the case for aggressive rate cuts in September. Markets had priced in a 25-basis-point cut; this print suggests the Fed may hold or deliver only one cut before pausing. Bond yields will likely stabilize or rise, pressuring equities that have priced in a soft-landing scenario with multiple cuts.

Inflation remains above the Fed's 2% target. Unless the next two months show material disinflation, the Fed will maintain a hawkish bias into year-end, keeping real rates elevated and constraining growth expectations.