Fed’s Preferred Inflation Gauge Flat In October. Savings Rate 5.7%. (TABLE)

Rates are up today but it’s not because of today’s tame inflation data, it’s mostly because of a weak $29b auction of 7yr notes weighing on the mortgage bond market. As for the inflation report: The Personal Consumption Expenditures Index, the Fed’s favorite measure of consumer inflation, was 0.2% in October and 1.3% year-over-year through October. Excluding volatile oil and food costs from the readings, “Core” PCE price index was flat for October and 0.9% YOY through October. The Fed looks closely at Core PCE excluding food and energy prices because of the price volatility of these two items, and the Fed’s zone for reasonable inflation is 1-2% per year. At 0.9%, Core inflation is slightly below their comfort zone for price stability, and PCE inflation has been in this range for a year.

Personal income was up 0.5% in October, which is consistent the range of the last 8 months. Wages rose 0.6%, which is roughly the same monthly level for all of 2010. The household savings rate was 5.7%. Below are all key details from the Personal Income & Outlays report. You can automatically create charts and download historical PCE data by scrolling to our data section on the right side of the site, or visiting our Data page.