Welcome to Seeking Alpha's Wall Street Lunch, our afternoon update on today's market action news and analysis.

Good afternoon. Today is Friday, September 29th, and I'm your host, Kim Kont.

Our top story so far. Is inflation hitting the Federal Reserve Target Zone?

In today's consumer spending and income data, the Fed's favorite inflation gauge, which is the core PCE price index, fell below 4% for the first time in two years.

Came in at 3.9%, rising 0.1% in August, a little softer than Wall Street expected.

Better yet, the three-month annualized pace of core inflation came in at 2.16%,

which several strategists noted was close to the Fed's target of 2%.

The six-month annualized rate is 3%.

Just within the 2-3% range, many economists say the Fed may be satisfied with to loosen.

Market odds of a quarterpoint Fed hike in December fell closer to 30% from 40%.

Chani's Gila Bama says his best guess is that Core PCE ends 2023 at up 3% to 3.2%.

Pantheon Macro notes that the Fed's current focus is

core services PCEX housing, where the three month annualized rate

is 3.4%.

Little change from July, but a sharp down shift

from the 5.5% increase in January.

The Fed has already conceded that core goods

and rent disinflation is well underway and soon they will have to acknowledge the

improvement in core services X rents setting the stage for rate cuts next year they said.

But Wells Fargo says that the timing of the jump in energy prices and oil prices in particular

is coming at a particularly inconvenient time for FOMC policy makers where the inflation

objective is primarily focused on the core. They say to the extent that energy prices

...