Stocks rebounded Friday, kicking off the fourth quarter with value-style stocks leading the gainers. 

The promise of a COVID-19 antiviral pill from Merck seems to have brightened investor sentiment for future growth and demand for travel, with the energy sector up more than 3 percent. 

U.S. Treasury bond-yields were down even as data released points to a sustained increase in inflation. 

The dollar was mixed against a basket of currencies, and international equity markets in Europe and Asia were also mixed.

The core PCE (personal consumption index) was up 3.6 percent from a year ago in August and increased 0.3 percent from a month ago. 

This was slightly higher but largely in line with the expected 3.5 percent. The core PCE is a closely watched measure by the Fed, as it excludes the more volatile elements of food and energy.

Interesting to note was that this was the highest level of record since May 1991. 

The increase in prices has largely been driven by strong consumer demand and continued supply-chain shortages and disruptions, including a chip shortage that has sent the price of cars and electronics higher.

The news comes as the Federal Reserve board has announced tapering will begin shortly, possibly in the next several months or early next year. 

With shortages likely to persist longer than initially expected, we think inflation will come down from current highs but settle well above the pre-pandemic average even as employment growth remains sluggish. 

The savings rate for August came in at 9.4 percent, a drop from 10.1 percent in July and well below the pandemic-era peak of 33.4 percent. 

As the pandemic took hold and governments restricted travel, Americans began to bolster savings accounts and pay down debt, which has led to excess savings and pent-up demand for goods and services.

However, as the economy has reopened, spending has also increased, and the demand for travel is returning to the marketplace, reducing the overall savings rate. 

Consumer demand continues to be a driver for growth in the economy, and wet think resilient demand will bolster GDP growth over the next few quarters with consumer balance sheets in a healthy state. 

A risk to that outlook, though, includes a persistent resurgence of the delta variant. However, vaccine mandates and new treatment options make that scenario less likely.  

The price of crude oil was up $0.67 at $75.70 and the spot price of gold was up $2.30 to $1,759.30.

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