US July PCE Inflation 3.7% YoY, Supports Fed Pause

The stall in consumer spending is the more telling signal here, as it suggests the Fed's tightening is finally biting into demand without yet forcing a sharp disinflationary break. For risk assets, this data point reduces the odds of an aggressive policy error in the near term, but the persistence of core inflation above target keeps the door open for further hikes if spending rebounds. What matters next is whether the spending freeze deepens into a broader slowdown or proves temporary, as that will determine if the Fed can truly afford a prolonged pause without reigniting price pressures.