With gasoline price surging, inflation as measured by the personal consumption expenditures (PCE) price index rose 0.4% in August after climbing 0.2% in July. In the 12 months through August, the PCE price index advanced 3.5% after rising 3.4% in July. The annual PCE inflation is also being lifted by a lower base of comparison last year. MARKET REACTION:STOCKS: U.S. stock futures extended gains after August PCE data BONDS: U.S. Treasury 10-year note yield extended its fall to 4.5363% after the data. And the consumer is now beginning to feel higher interest rates - the higher cost of financing debt is beginning to impact their finances."

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Persons: Mike Blake, RANDY FREDERICK, CHARLES SCHWAB, DANIEL PORTO, KIM FORREST, PETER CARDILLO Organizations: REUTERS, Treasury, Global Finance, Markets, Thomson Locations: Carlsbad , California, U.S, AUSTIN , TEXAS, PITTSBURGH