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# Inflation came in cooler than expected and the bond market took no notice
- URL: https://www.sharespective.com/stories/inflation-came-cooler-expected-bond-market-2026-10-01/
- Published: 2026-09-30T21:15:02.000Z
- Updated: 2026-10-19T19:28:25.000Z
- Description: Prices rose 3.4% over the year to August on the measure the Federal Reserve watches. Economists had expected about 3.7%. Core prices, which leave out food and energy, held at 3.0% and rose 0.2% in the month against a 0.3% forecast.
- Author: Shaun Botha
- Tags: Economy, #story, #group-economy

Prices rose 3.4% over the year to August on the measure the Federal Reserve watches. Economists had expected about 3.7%. Core prices, which leave out food and energy, held at 3.0% and rose 0.2% in the month against a 0.3% forecast.

**Some of that improvement is new arithmetic.** The Bureau of Economic Analysis has changed how it prices legal services, computer software and portfolio management. July's core reading has since been revised down to 3.0% from the 3.3% first reported.

Energy did what the war in Iran was always going to make it do. Petrol prices rose 4.4% over the month and energy goods and services 2.3%.

Wall Street liked the headline for about four hours. The S&P 500 was up 0.58% by late morning and closed 0.25% lower at 7,651.54\. The Dow gave up 443.87 points, or 0.86%.

The 10-year Treasury yield went the other way, rising to 5.29%, the most it has paid since 2007\. Traders still cut the odds of a quarter-point rise on 27-28 October to about a third, from roughly 70% on Tuesday.

Our view 

one softer month does not settle this, and some of it came from a change of method rather than cheaper goods. I'd want a second month at 3.0%, on both methods, before calling it a trend.

[ This story ran in The Afternoon Fade Thursday 1 October’s edition, with the market snapshot, the other two stories, the numbers and the week ahead. Read the whole edition → ](https://www.sharespective.com/sharespective-2026-10-01/)