The Fed's preferred inflation metric is coming.

Photo: Bloomberg

PCE ahead | US stock futures are slipping following a rally in the S&P 500 yesterday, while European stocks are up. Treasuries are rising and the dollar has edged higher, with the Federal Reserve’s preferred PCE inflation metric on the slate for later. The data release is expected to show a degree of consumer caution in spending and saving. Most of the action has been in Asia, where the Japanese yen bounced as the ruling LDP chose Shigeru Ishiba — a backer of the Bank of Japan’s efforts to normalize policy — as its new leader.

Market euphoria following Fed's big cut is fading.

Fading euphoria | As the dust settles on the Federal Reserve’s big interest rate cut this week, traders are starting to wonder what is next. That means some of the euphoria that followed Wednesday’s move is starting to ebb, leaving stocks with declines in European equities and US futures, contrasting with gains in Asia. Meanwhile, Bank of America’s Michael Hartnett warned the rally since the decision is stoking the risk of a bubble, making bonds and gold an attractive hedge against any recession or renewed inflation.

S&P 500 stages a $1.3 trillion rally.

Optimism abounds | A rally that added over $1.3 trillion to the S&P 500 this week powered ahead as the latest economic data did little to alter bets on a series of Federal Reserve rate cuts. Every major group in the US equity gauge rose Thursday, while Treasuries saw small moves. Swap contracts priced in slightly higher odds of a half-point Fed reduction next week after a Wall Street Journal report said policymakers were considering cutting by 25 or 50 basis points. German bunds snapped a seven-day winning streak after the European Central Bank’s Christine Lagarde said rates would be sufficiently restrictive after an expected quarter-point interest rate cut.

All eyes on much-awaited US jobs report.

Jobs wait | The wait is almost over for US jobs data that will be key to the Federal Reserve’s decision to cut interest rates. Ahead of Friday’s release, the S&P 500 Index and two-year Treasury yields — among the most sensitive to policy expectations — fell in tandem for a third straight day. The nonfarm payrolls figures are expected to show that hiring and wage growth picked up in August. They will come after a private report from ADP on Thursday showed that the US added the fewest jobs since 2021. While the private figures have been a poor prognosticator of payrolls in recent years, the correlation between the two data sets has been improving.