Fed’s preferred inflation gauge shows core prices rose 3.3% annually in July

JUST IN: The Fed's preferred inflation gauge, core PCE, rose 3.3% annually in July, staying well above the 2% target and keeping a rate move in play.

Core inflation just came in at 3.3 percent, and the Fed's target is 2.

That's core PCE for July, the gauge the Fed actually trusts, up 0.2 on the month and right in line with forecasts. Headline was hotter, 3.7 percent annually, a tenth above what Wall Street expected. Gasoline got cheaper, furniture got cheaper, but services did the damage, financial services and insurance up 1.2 percent in a single month.

Here's what caught my eye. Incomes rose faster than spending, and markets now think the next move is more likely a hike than a cut, with December the favourite. Ten and thirty year yields are already at their highest since 2007, which is not a comforting year to be compared to.

All of it lands on Chairman Kevin Warsh, who speaks Friday at Jackson Hole. He's said almost nothing since May. Friday, silence stops being an option.

This is Liu Yang, reporting for HIT.