Where PCE is now—and our August forecast

PCE is the Personal Consumption Expenditures price index, a measure of consumer inflation closely watched by the Federal Reserve. Core PCE excludes food and energy. July is the latest published month; the August report is scheduled for Wednesday, September 30.

How our call compares with outside forecasts

We can verify a four-number nowcast from the Cleveland Fed and published reports of narrower calls from Goldman Sachs and Capital Economics. The last two cover core inflation only. These are separate dated estimates, not a Bloomberg consensus.

pp = percentage point. Cleveland Fed August nowcast: September 24 snapshot. Goldman Sachs’ +0.26% core-monthly estimate was reported September 11 by The Wall Street Journal; Capital Economics economist Stephen Brown’s +0.3% monthly and +3.4% yearly core estimates were reported by Barron’s. Those reports may not reflect subsequent revisions to the firms’ forecasts. A missing entry means we could not verify a comparable August forecast; it is not a zero forecast.

Our final call: headline 0.3% monthly / 3.8% yearly; core 0.3% monthly / 3.4% yearly. The differences above are tiny because our displayed numbers are rounded. Watch whether the actual monthly core reading breaks away from the roughly 0.3% cluster.

The four bars start at zero; monthly and yearly panels have different, labeled scales. Annual numbers are sensitive to revisions in prior months. Our headline monthly estimate is close to the threshold between an official 0.3% and 0.4% reading.

A 48-hour mortgage-rate move

The right-hand chart shows changes in basis points since September 22, rather than overlaying different yield levels. Real yields and breakevens can be affected by market risk and liquidity; the chart does not prove a single cause of the bond selloff.

September’s unexpectedly strong business survey coincided with the selloff and may have led traders to anticipate stronger growth and a higher future path for policy rates. Mortgage quotes respond to mortgage-backed securities (MBS) and lender pricing, so they need not move point for point with Treasuries. We do not have comparable dated MBS spread measurements for these days and cannot say exactly how much any spread changed.

Oil, refining and the next inflation risk

A crack spread measures the difference between a refined fuel’s wholesale price and the price of crude oil. It can help explain why prices at the pump behave differently from crude. The source data show New York Harbor diesel’s spread over Brent rose from $87.60 a barrel in August to $95.20 on September 18, while that region’s gasoline spread fell from $43.90 to $24.60. The product and location matter; there is no single crack spread for every consumer.

The key timing distinction: August’s fuel costs are inputs to the August forecast above. Fuel changes during September may affect bond markets now, but their more direct inflation impact belongs in the September PCE report, due later. Wholesale diesel is especially relevant to transport costs, though it is not a direct one-for-one addition to households’ PCE.

Hotter, on target or cooler?

These are directional scenarios, not rate promises. BEA’s September 30 annual update could revise the historical levels used in yearly inflation calculations. Read the monthly figure and revisions together.

Monthly payment on a $400,000 loan

Loan amount: $400,000 · 30-year fixed term · principal and interest only. This is a $400,000 mortgage balance, not the purchase price. Property taxes, homeowners insurance, HOA dues, mortgage insurance if applicable, points and closing costs are extra.

6.00% → 7.45% = about $385 more every month on this loan.

Over one year, that difference is about $4,620 in principal and interest payments. The move from Tuesday’s 7.17% index to Thursday’s 7.45% index alone adds about $76 per month on the same $400,000 balance. The 6%, 6.5% and 7.75% figures are illustrations, not current quotes or predictions.

Monthly payment = loan × r ÷ [1 − (1+r)⁻³⁶⁰], with r equal to annual rate divided by 12. Dollar amounts are rounded to the nearest dollar; displayed differences are rounded from unrounded payments. Compare actual lender quotes at the same points and loan terms.