Q3 GDP accelerates to 3.4% and September core PCE rises to 3.1% as expected; December Fed hike odds hold near 83% (Oct 29)

What happened

The U.S. Bureau of Economic Analysis reported Q3 GDP grew at a 3.4% annual rate, topping the 3.1% consensus forecast and up from 2.2% in Q2. The Fed's preferred inflation gauge, the core PCE price index, rose 0.3% in September, lifting the 12-month core PCE rate to 3.1% from 3.0% — both as expected. The data landed at 8:30 a.m. ET, one day after the FOMC voted 10-2 to hold rates at 3.75%-4.00%. After the prints, markets priced 83% odds of a 25bp hike at the Dec. 9 meeting, with 67% odds of a follow-on hike by the March 17 update.

Who’s affected

• Broad market: S&P 500 futures fell ~0.4% after the data; rate-sensitive growth/mega-cap tech remain under pressure with 10-year yields near 5.03%. The strong-growth-plus-sticky-inflation mix reinforces the case for December tightening, which is a headwind for long-duration AI/growth names but supportive of banks and net-interest-margin stories.