September wrap: cooling inflation propels US stocks

US equities closed September with solid gains: the S&P 500 and the Nasdaq both advanced, driven primarily by an unexpected slowdown in inflation. The Fed's preferred gauge, the PCE price index, fell to 3.4%, below forecasts, which immediately reduced market odds of an October rate hike. Against that backdrop, analysts note that the US economy and consumer demand are showing impressive resilience.

That said, it is too early to celebrate: inflation remains well above the 2% target, and Fed officials' views are split, from calls for patience to warnings about persistent price pressure. This macro uncertainty, combined with quarter-end profit-taking, weakened the US dollar, and the key question — what the Fed will do in October — remains unresolved. Follow the link for more details.

US labor market: job swings and pressure on USD

The US labor market continues to show surprising durability: weekly initial jobless claims remain near historic lows, and annual corporate layoff totals have fallen nearly 50% versus last year. Nevertheless, August introduced a wrinkle — monthly job cuts ticked up. Sectors at risk include consumer goods, food processing, and technology, where companies are undergoing aggressive restructuring. The narrative of mass layoffs driven by AI adoption has receded.

Investors should not relax yet. Analysts warn of a potential September shock. Estimates point to a sharp jump in corporate layoffs to around 78,000 and an increase in initial claims. If these forecasts materialize and the labor market shows cracks, macro consequences would follow quickly. Any meaningful weakening in jobs would be a red flag for investors and would likely force the US dollar to give up ground. Follow the link for more details.

AI lifts markets, gold and dollar sound alarm

Artificial intelligence remains the primary global market driver: a strong guide from Micron Technology confirmed robust demand for AI chips. That supported gains in Asian tech indices, although US markets closed mixed, and Europe is lined up for a modest open. Meanwhile, the US fixed-income market is under strain — the 30-year Treasury yield hit highs not seen since 2002 as investors continue to price in further Fed tightening.

A paradox is unfolding across commodity and currency markets. Safe havens like gold and silver are rising alongside risk assets, indicating that investors are hedging against inflation risk rather than simply fleeing equities. Oil is easing on hopes of stable Middle East supply. FX markets remain driven by macro. The dollar extended gains for a fourth straight session on US economic strength, while the Japanese yen was the weakest G10 currency after dovish signals from the Bank of Japan. Follow the link for more details.