ECONOMY • Yesterday morning
The economy grew 1.5%. Inflation stayed at 3.7%.
Second-quarter GDP came in below the 1.8% economists expected, and well below the 2.1% of the first quarter.
The inflation picture was the softer half of the report. June PCE fell 0.1% for the month, putting the annual rate at 3.7%. Core PCE, which strips out food and energy, rose 0.1% monthly for an annual 3.3%. Jobless claims came in at 197,000, up 9,000 on the week.
And yet the market still prices a 63% chance the Fed raises rates in September. Slower growth has not bought any relief, because inflation is still running well above target.

Second-quarter GDP against the inflation the Fed still reads.
If you are holding cash or short-dated bonds, this combination is why the yields look generous and why they may stay that way longer than anyone planned for.
Source: Bureau of Economic Analysis / CME FedWatch