Cooler PCE can't stop the 10-year from topping 5.3%

Good morning. Last night's August PCE inflation report came in notably softer than expected. Core inflation, the Fed's favorite gauge, was 3.0% against forecasts of 3.3%. Odds of an October rate hike slid from about 45% to 35%, and many now expect the next hike in December.

Still, plenty of people are urging caution. A change in how the data is compiled and revisions to past figures did a lot of the work, so it's too early to say inflation has genuinely turned. The bond market certainly wasn't comforted: the 10-year yield rose above 5.3%, its highest since 2002, and mortgage rates rose for a sixth straight week, with the 30-year fixed well above 7%. Demand for home loans and refinancing has dropped sharply.

On the stock side, only the Nasdaq smiled. Tech lifted it after the PCE data, while the S&P 500 finished slightly lower. Chip names like Intel and AMD wrapped up their best month since June, and the third quarter ended as a narrow, tech-led market.

There was news from Korea, too. Seoul laid out about $200 billion of energy projects, including nuclear and natural gas, as part of its $350 billion US investment pledge, and President Trump announced an Alaska LNG project funded by Korean money. The developer hasn't made a final investment decision yet.