U.S. PCE price index, the Fed’s preferred gauge, rose 3.7% YoY in July,
unchanged from June and marking a 65th consecutive month above the Fed’s 2%
target; consensus was 3.6%. The PCE rose 0.2% MoM in July, above expectations;
June was revised to -0.1% MoM, the weakest reading since April 2020. Escalation
in the Iran conflict has stalled the post-spike pullback in inflation and may
intensify Fed debate over further hikes versus holding rates. The BEA left Q2
real GDP annualized growth at 1.5%. Separately, U.S.-Canada trade talks broke
down on Friday, raising the risk of tariff-driven upside to near-term inflation.
