- The New York Fed's September Survey of Consumer Expectations showed the median one-year inflation outlook rose to 3.9%, up 0.3 percentage point from August and the highest since May 2023.
- Household spending growth expectations climbed to 5.5%, also up 0.3 percentage point month over month and the highest since May 2023.
- Longer-term expectations are better anchored: the three-year outlook edged up 0.1 point to 3.3%, and the five-year view held at 3%.
- Market-based measures are less positive: the five-year breakeven is around 2.35%, its highest of the year, and Treasury yields have reached levels not seen since the early part of the century.
- Markets expect the FOMC to hold rates steady at its October meeting, while futures imply a fed funds rate of 5.58% in five years versus the current 3.75%-4% target range.
Quotes
“The median view for inflation over the next 12 months rose to 3.9%, up 0.3 percentage point from August and the highest level since May 2023, when the figure was at 4.1%.”
“Similarly, the survey found that household spending growth is expected to hit 5.5%, also up 0.3 percentage point month over month and the highest since May 2023.”
“Markets largely expect the Federal Open Market Committee to keep benchmark rates steady when it meets later in October.”