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US September PCE core inflation +0.5% m/m vs +0.3% expected, 10s +6bp

Thu 29 Oct 2026

Treasuries (close 2026-10-28): 2s 4.67% (-3.0bp), 10s 5.05% (+6.0bp), 30s 5.37% (+7.0bp).

Tape (close 2026-10-28): VIX 16.91, 2s10s +38bp.

Narrative: Inflation surges, PCE shows. Fed pause on rate hikes unlikely to last long with prices still rising.

What mattered:

  • US September PCE core inflation +0.5% m/m vs +0.3% expected
  • Gross Domestic Product Price Index: 2.2
  • ECB open to hiking rates in December if inflation outlook doesn't improve - report
  • Strong US inflation and growth will keep Fed on a tightening path
  • Fed holds, Warsh hedges, and traders dial back the tightening
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