Macroeconomic/ geopolitical developments

• The S&P 500 and Dow Jones Industrial Average (DJIA) hit new record highs this week, fueled by the Federal Reserve’s recent rate cut, strong economic data, and optimism over China’s stimulus measures, with both indices marking their 42nd and 32nd record closes of the year, respectively.
• China’s largest economic stimulus since the pandemic, including rate cuts and billions in new lending, sparked a global market rally, with Asian stocks surging and commodities rising though analysts remain cautious about long-term effectiveness due to weak domestic demand.

• In August, the Personal Consumption Expenditures (PCE) price index rose by just 0.1%, bringing annual inflation down to 2.2%, while core inflation remained slightly elevated at 2.7%, signaling continued progress toward the Federal Reserve’s 2% target.

• Investors will closely watch the September US jobs report, PMI surveys, jobless claims, and other key economic data, which could influence expectations for further Federal Reserve rate cuts following its recent monetary easing.

Global financial market developments

• US and global equity averages extended still higher, to records in places.
• US and European bonds stay in consolidation mode.
• The US Dollar Index marked time in consolidation mode, near multi-month lows.
• Gold futures rallied to another new record.
• Oil futures sold off, damaging September’s rebound.

Key this week

Central Bank Watch: Central bank activity is modest this week, but with Fd speakers still in the spotlight, notably Powell on Monday.

Macro Data Watch: The main macro data releases this week are the global PMI which are released Tuesday and Thursday, and of course Friday’s US Employment Report. Some other releases of note are the EU and German CPI, plus Japanese and German Retail Sales.

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