U.S. Indexes closed the final session of the week in positive territory following strength in wake of the US PCE report for August, which saw all the major metrics print in line. Treasuries saw two-way action on PCE, while the Dollar sold off. In the FX space, the Greenback saw weakness and pared some of the notable strength seen on Wednesday and Thursday. As has been the case for the last couple of days, G10 FX peers have been at the whim of the Dollar and as such were firmer across the board with little currency-specific newsflow. The crude complex extended on weekly gains, as geopolitics has dominated the slate, with the latest update via the Wall Street Journal noting Trump told Zelensky he was open to lifting restrictions on Ukraine’s use of American-made long-range weapons to strike inside Russia, but he did not commit to doing so during a meeting on Tuesday. Sectors were almost exclusively in the green, with only Consumer Staples in the red and weighed by Costco (-2.9%) after SSS missed. Consumer Discretionary and Utilities outperform. Aside from PCE on Friday, overnight announced tariffs on heavy trucks, pharma, and some home improvement products as of Oct 1st, 2025. On pharmaceuticals, a 100% tariff will be imposed on any branded or patented pharmaceutical product unless the company is building its pharmaceutical manufacturing plant in America. CNBC later reported that the White House will honour a 15% cap on pharma tariffs as part of trade deals with the EU and Japan, while Reuters said Britain would face 100% tariffs on US pharma. Precious metals (XAU, XAG) both firmed, with Spot Silver outperforming its counterpart. PCE was largely as expected. Personal Income & Consumption were the exception, rising 0.4% (exp. 0.3%, prev. 0.4%) and 0.6% (exp. 0.5%, prev. 0.5%), respectively. Core rose 0.2% M/M (exp. 0.2%) after the downwardly revised July figure of 0.2% (prev. 0.3%). Core Y/Y printed 2.9% (exp. 2.9%, prev. 2.9%). Headline M/M rose 0.3% (exp. 0.3%, prev. 0.2%) and Y/Y rose 2.7% (exp. 2.7%, prev. 2.6%). Personal Consumption on a real basis rose 0.3% (prev. 0.3%, rev. 0.4%). The PCE supercore measure rose 0.33% M/M (prev. 0.4%) and 3.4% Y/Y. The report resulted in some US Dollar selling, but quite a muted reaction in T-Notes, with October rate cut bets seeing a slightly dovish move by end of day. NFP on Friday is more likely to have a greater impact on the trajectory of the FFR in the current environment, whereby downside risks towards the labour market have gained more significance in the Fed’s decision-making. Ahead, Pantheon Macroeconomics expect real after-tax income to remain stagnant through the end of this year, “given that employment intentions remain weak and only about one-third of the tariff-related uplift to consumer prices has fed through”. The firm continues to expect core PCE inflation to peak at about 3.25% early next year and then to rise at an annualised pace of just 2% from Q2. The University of Michigan Final Sentiment for September was revised lower to 55.1 from 55.4, against expectations for an unrevised print, whilst Expectations and Sentiment were revised down to 51.7 (prev. 51.8) and 60.4 (prev. 61.2), respectively. Inflation expectations ticked lower, with 1 year at 4.7% (prev. 4.8%) and the longer-term 5 year at 3.7% from 3.9%. Surveys of Consumers Director Joanne Hsu said, “Although September’s decline was relatively modest, it was still seen across a broad swath of the population, across age groups, income, and education”, although Hsu adds “a key exception: sentiment for consumers with larger stock holdings held steady, while for those with smaller or no holdings, sentiment decreased.” Hsu added that consumers continue to express frustration over the persistence of high prices, which printed the highest reading in a year. September interviews highlighted the fact that consumers feel pressure both from the prospect of higher inflation as well as the risk of weaker labour markets. Bowman, the Vice Chair of Supervision stood firm in the dove camp, arguing recent data, including benchmark payrolls revisions, show they are at serious risk of already being behind the curve; Should these conditions continue, concerned will need to adjust policy at a faster pace and to a larger degree going forward. Bowman adds that recent data show a materially more fragile labour market, inflation ex-tariffs hovering not far above target. As such, Bowman views now as the time for the FOMC to act decisively and proactively to address decreasing labour market dynamism and emerging signs of fragility. She expects inflation to return to 2% target after one-time adjustment from tariffs. Surprisingly, Bowman argued against the usual data-dependent approach advocated by many central bankers across the globe. “Inflexible, dogmatic view of data dependence gives a backwards-looking view of the economy, guarantees we remain behind the curve”. Fed should consider shifting focus from overweighting the latest data points to a proactive forward-looking approach, Bowman contended. On the balance sheet, she believes that if tilted towards shorter-dated securities, it would offer more flexibility. Bowman prefers the smallest balance sheet possible with reserves closer to scarce than ample. She strongly supports holding only treasuries. Meanwhile, Bowman sees slower population growth and an ageing population as more prominent factors in pulling down the neutral rate. Elsewhere, Oil closed higher by 1% while Gold ended Friday’s session with again of 0.6%.
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For anyone following my Platinum Service it made 230 points on Friday and is now ahead by 3244 points for September after ending August with a gain of 3362 points after closing July with a gain of 3753 points after closing June with a gain of 3530 points, having closed May with a gain of 3606 points, after closing April with a gain of 7685 points after closing March with a gain of 2254 points while closing February with a gain of 4180 points. January ended with a gain of 2768 points while 1997 points were gained in December. October ended with a gain of 2179 points, after closing September with a gain of 4402 points, following a loss of 301 points in August. July gained 1908 points while June saw a gain of 2074 points. The Platinum Service made a record 9619 points in October 2022. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 2300 points. I have a YouTube Channel which contains recent interviews I have given This can be viewed by clicking HERE Please subscribe to this for new interview notification
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