US inflation cooled slightly in August, but manufacturing gauge surges, keeping Fed on alert for rate hikes.

Consumer prices in the U.S. rose 3.4% year-over-year in August, slightly below expectations, while core inflation also came in lower than anticipated. However, the Institute for Supply Management's Manufacturing Prices Paid Index surged nearly 10% in September, indicating rising factory costs that could lead to future consumer price increases. This mixed data, alongside a weak jobs report, has led traders to cut odds of an October Fed rate hike, though a December hike remains possible.