AUG · ISSUE 35 · August 24, 2026
MACROThe inflation print the Fed actually watches
Core PCE lands Wednesday. It isn't the headline CPI: it's the one that sets the pace of rates.
JULY CONSENSUS
3.2-3.3%
year over year
JUNE PRINT
3.3%
had been easing
FED TARGET
2.0%
still far off
THE NUMBER
3.3%
↓ June level, expected to hold or slip a tenth
Core PCE strips out food and energy to show underlying inflation. It's been cooling slowly, but a 6.5% jump in portfolio management fees inside July's PPI threatens to push it higher.
THE NUMBER
ZOOM IN3.3%
3.3%
Fed target: 2.0% · still +1.3 pts above
The last mile of inflation is the slowest. From 9% to 3% was fast; from 3% to 2% is dragging.
Every tenth of a point shifts the odds of a September hike, now around one in three. That's why this print rules.
- PTS
- — Percentage points. 1.3 pts = 1.3 points between two percentages.
- LAST MILE
- — The final stretch of falling inflation, always the hardest.
QUOTE
CONTEXTThe stretch that won't quite fall
“Getting from 9 to 3 percent was the easy part. From 3 to 2 is fought in services, and there time works against you.”
Services inflation is sticky: it hinges on wages and rents, which don't drop from one month to the next.
- SERVICES
- — The part of the economy not tied to goods: rent, healthcare, leisure.
- STICKY
- — Inflation that falls very slowly because its components are rigid.
TREND
5 MONTHSThe descent that's stalling
Five months of tiny declines. The market wants the trend to continue, not to stall.
Core PCE year over year, month by month (July estimated). The slope flattens right near the target.
- TARGET
- — The 2% inflation the Fed pursues over the medium term.
- ESTIMATE
- — Data not yet released; consensus forecast.
SCENARIOS
TWO PATHSWhat happens if it cools or heats up
IF IT COOLS (≤3.2%)
The relief stocks are hoping for
- Reinforces the idea that inflation is still falling.
- Lowers the odds of a September hike.
- Yields and the dollar tend to ease; stocks breathe.
IF IT HEATS UP (≥3.4%)
The scare no one is pricing
- Revives fears of inflation getting stuck.
- Raises the odds of further tightening.
- Yields climb, pressure on tech and long-duration names.
The print is binary for the market: it decides whether the Fed can ease or keeps its finger on the trigger.
- BINARY
- — An event with two clear, opposite outcomes for the market.
- DURATION
- — How sensitive an asset's price is to changes in rates.
BREAKDOWN
WHAT WEIGHSWhat really drives the number
Wages, healthcare, leisure: the sticky ones
Where most disinflation has come from
Rents: they fall with a lag
Fees: July's upside risk
July's scare comes from financial services: surging management fees leaking into the print.
Not every component weighs the same. Services rule, and they're the hardest to tame.
- HOUSING
- — Imputed rent cost; it adjusts with a lag of several months.
- DISINFLATION
- — Prices rising more slowly; not the same as prices falling.
CALENDAR
BIG WEEKFive events that define the week
| WED AUG 26 · 08:30 ET | CORE PCE (JULY) | High | The Fed's inflation print. Every tenth shifts the September odds. |
| WED AUG 26 · after close | NVIDIA Q2 FY27 | High | The gauge for all AI spend. Guidance outranks the beat. |
| THU AUG 27 · 08:30 ET | JOBLESS CLAIMS | Medium | Labor pulse. Above 240k starts to worry the market. |
| FRI AUG 28 · ~10:00 ET | FED SPEECH (JACKSON HOLE) | High | The new chair debuts 19 days before the September meeting. |
| FRI AUG 28 · 10:00 ET | MICHIGAN SENTIMENT | Low | Consumer confidence and inflation expectations. |
Three binaries in 72 hours. With the VIX at 15, the market goes in uncovered for all of them.
- PCE
- — Personal Consumption Expenditures: the Fed's preferred inflation gauge.
- JACKSON HOLE
- — Annual central-bankers symposium in Wyoming.
- FOMC
- — The Fed committee that sets interest rates.
WRAP
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- PCE
- — Personal Consumption Expenditures: the Fed's preferred inflation gauge.
- CPI
- — Consumer Price Index: the headline inflation number.