Wall Street got some much-needed inflation data on Wednesday. The personal consumption expenditures price index rose 3.4% year over year in August, well below a Dow Jones forecast of 3.7%. Excluding food and energy, PCE increased by 3% year over year , also less than anticipated. Those numbers gave equities a boost in early trading while moving Treasury yields off of multiyear highs. It also moved odds of an October rate hike to 35% from around 50% on Tuesday, per the CME Group's FedWatch tool. However, market moves were kept in check as traders also weighed the latest employment data out of ADP. Private payrolls rose by 90,000 in September , topping a Dow Jones consensus of 68,000. Should Friday's U.S. jobs report come in stronger than expected, investors may reprice the likelihood of another Fed rate increase. Here's what some investors, economists and strategists on Wall Street had to say about the data: Chris Rupkey, chief economist at FWDBonds: "The inflation fire is not burning as hot as markets expected in August. … The data today say the economy is not overheating, and that inflation was cooler than expected. There is no need to hurry with additional rate hikes and policymakers can sit and wait for how the geopolitical risks play out. Inflation is cool, what's the hurry?" Bret Kenwell, U.S. investment analyst at eToro: "Today's cooler-than-expected inflation report will likely be a relief for Wall Street, particularly as investors hope to see the recent rise in Treasury yields cool and expectations for a Fed rate hike next month fade. … The inflation battle is hardly over, but today's numbers are a step in the right direction. A meaningful retreat in oil prices would help ease inflationary pressure, but the immediate focus is on Treasury yields, which have risen sharply over the past month even as equities have remained relatively resilient." Peter Boockvar, CIO of One Point BFG Wealth Partners: "[PCE] does give the Fed reason to wait in October with the bond market changing its pricing." Adam Hetts, portfolio manager at Janus Henderson Investors: "The underlying economy proves resilient once again, with Q2 GDP growth revised up to 2.2% alongside a particularly strong Q3 GDP nowcast. While today's inflation data is somewhat better than expected, strong labor and GDP data suggest the print is unlikely to derail consensus expectations for another rate hike before the end of the year." Chris Osmond, CIO at Fifth Third Wealth Advisors: "Today's data delivers a goldilocks combination. … The net effect is broadly supportive of risk assets and materially reduces the probability of an October rate hike, while keeping a Q4 hike on the table." Heather Long, chief economist at Navy Federal Credit Union: "The No. 1 problem in the economy is hot inflation. Progress has stalled on taming it. The PCE Inflation data – the Federal Reserve's favorite – show no progress in August on inflation. And it's inevitable that September will be higher."
