US Core PCE Holds Above 3.3% as Trump Tariffs and Iran War Entrench Inflation

1 articles · Updated · The Motley Fool · Aug 23

Core PCE eased only to 3.3% in June after hitting 3.4% in May, and Cleveland Fed nowcasts put it near 3.29% in July and 3.34% in August.
That stickiness contrasts with headline inflation, which fell from 4.2% in May to 3.4% in July as fuel prices retreated from the Iran-war spike.
Trump's latest 10% to 12.5% tariffs on more than 80 countries and supply-chain rerouting after the Strait of Hormuz closure are lifting costs beyond energy and feeding broader price pressures.
For the Fed, entrenched inflation raises the risk Kevin Warsh and the FOMC will have to lift rates, even as the 30-year Treasury yield has already reached a 25-year high.
Wall Street's record run could be vulnerable because higher borrowing costs may slow the debt-funded AI data-center buildout that has powered the Dow, S&P 500 and Nasdaq.