The core Personal Consumption Expenditures (PCE) price index, the Federal Reserve's preferred inflation gauge, rose 0.3% in October, reaching 2.8% year-over-year (YoY), up slightly from 2.7% in September. This increase highlights persistent inflationary pressures, particularly in services like housing and healthcare.

Consumer spending demonstrated resilience, with a 0.4% increase in October following a revised 0.6% gain in September. Personal income also saw a significant boost, rising by 0.6%, the largest monthly gain since March. These figures indicate robust consumer activity, which could sustain economic growth in the fourth quarter.

Simpan Views

Anticipating Delays in Rate Cuts

Persistent core inflation hovering near the upper range of the Fed's 2% target may prompt a cautious stance from policymakers. This justifies expectations for rate cut delays as the Fed balances robust consumer activity with the need to control inflation.

With inflation showing resilience, the Fed's dual mandate of controlling prices and maximizing employment remains critical. Strong income and spending data will weigh heavily against sticky inflation risks in service sectors.

What’s the Next Strategy?

For our Sustainable Equity Fund, we are reducing exposure to China-dependent stocks due to ongoing economic uncertainties and shifting toward companies with strong U.S. dollar and gold exposures, which are well-positioned to benefit from potential currency strength and market stability.

Additionally, we continue to implement a momentum-based strategy to capitalize on market trends and deliver outperformance amid heightened volatility.