Consumer Confidence, PCE Data Due With Inflation Stuck Above 3%

For rate-sensitive investors, the week of Aug. 24 is a two-part test of the Fed's higher-for-longer stance: Tuesday's consumer confidence print and Wednesday's July PCE — the central bank's preferred inflation gauge. With PCE still above 3% against a 2% target and the September FOMC meeting weeks away, an upside surprise would harden expectations for a continued hold, while a cooler core reading could reopen the easing debate.

Wall Street heads into the week of Aug. 24, 2026, facing two macro releases that will anchor the Federal Reserve's September rate decision: the Conference Board's August consumer confidence report on Tuesday, Aug. 25, and the July personal consumption expenditures (PCE) inflation report on Wednesday, Aug. 26. Both arrive with inflation still running stubbornly above 3% against the Fed's 2% target, making them the primary catalysts for a market that has spent much of 2026 pricing in a prolonged policy hold.

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With PCE still above 3% against a 2% target and the September FOMC meeting weeks away, an upside surprise would harden expectations for a continued hold, while a cooler core reading could reopen the easing debate.

The consumer confidence print is expected to show sentiment fell again in August after slipping in July. That would extend a run of weakness that has persisted most of the year. The AP report attributes the erosion directly to a cost-of-living squeeze: the U.S. war with Iran has curtailed global oil shipments through the Strait of Hormuz, lifting gasoline prices and raising freight costs for a wide range of goods, from groceries to clothing. For the Fed, softening confidence matters less as an isolated data point and more as a signal that households are absorbing the cumulative weight of higher prices — a dynamic that can feed back into slower spending and, eventually, cooler demand.

The PCE report is the week's main event for fixed income and rate markets. Unlike the consumer price index, PCE is the measure the Fed explicitly targets, and it has told the same stubborn story: inflation remains above 3%, roughly a full percentage point over the 2% goal. The trajectory since 2025 has been a frustrating two-step for policymakers. Inflation approached the 2% target in early 2025, only to creep higher as Washington imposed a wide range of tariffs globally. It then accelerated in early 2026 when the Iran war constrained oil shipments from the Strait of Hormuz, layering an energy and shipping-cost shock on top of the tariff impulse.

Against that backdrop, the Fed is expected to keep its benchmark interest rate unchanged at its September meeting. That would extend a hold that markets increasingly treat as the base case, but the week's data will determine whether that hold feels comfortable or precarious. A hotter-than-expected July PCE print would reinforce the higher-for-longer narrative, pressuring rate-sensitive sectors and pushing back any timeline for cuts. Conversely, a cooler core PCE reading — especially if paired with a sharper confidence drop — would reopen the debate over whether demand is softening fast enough to restore the disinflation trend.