Analysts: last two days of data have been mixed for the Fed's more favored PCE, chances of a 50bp rate cut by the Fed next month still exist

Analysts Anna Wong and Stuart Paul said the good news from the July CPI report was that core indicators were weak. However, inflation levels in some core service categories (including home rentals and auto insurance) remain high. This could have a mixed impact on the core PCE index (the Fed's favored price indicator). In our view, this won't stop the FOMC from cutting rates by 50 basis points at its September meeting. With unemployment rising - we expect it to hit 4.5% this fall, which could happen by October - the Fed will increasingly focus on the employment component of its dual mission.