Trend analysis based on the updated indicator.
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The newly released year-over-year growth rate of the US Core Personal Consumption Expenditures Price Index (Core PCE) for the third quarter of 2026 (Q3 2026) came in at 3.3%, flat with the previous reading of 3.3%. Although the data met market consensus expectations for sideways inflation, it remains a distance from the Federal Reserve's 2% long-term target, indicating that inflation stickiness still exists ahead of a rate-cut cycle, becoming a key factor influencing macro capital flows.
Regarding key sub-components, goods and service prices showed diverging trends. According to market breakdowns, although goods prices experienced a decline benefiting from supply chain easing, service inflation remains the main driver pushing up prices. Expenditures in service sectors such as housing rent and healthcare remain robust, coupled with wage growth supported by the labor market showing no obvious signs of converging, making it difficult for core prices (excluding food and energy) to retreat further significantly.
Regarding the sticky performance of this inflation data, investment banks and institutions largely believe it reflects a structural shift in prices in the post-pandemic era. Analysis by Fitch Ratings points out that although core inflation excludes energy, recent global oil price volatility due to the Middle East situation has indirectly driven up corporate operating and transportation costs, which are gradually being passed on to end-service prices. This presents the Federal Reserve with the daunting challenge of the "last mile" of inflation when assessing a policy pivot.
Looking ahead, in the short term (1-2 months), the market will closely monitor whether the Federal Reserve's hawkish stance will be extended due to sticky inflation. Investors should guard against the risk of valuation corrections for tech and growth stocks brought about by the high-interest-rate environment. In the medium term (3-6 months), if a US economic slowdown drives a cooling in labor demand, it is expected to naturally suppress service inflation, serving as a catalyst for a monetary policy pivot; conversely, if geopolitical conflicts continue to cause a secondary transmission of commodity prices, the risk of inflation reigniting may force the market to significantly reprice the future interest rate path.
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