Closing Recap

U.S. stocks finished broadly higher, shrugging off new tariff announcements as in-line inflation data solidified hopes for continued Federal Reserve rate cuts; gold stocks and utilities rallied, while Treasury yields rose on a quiet day for bonds. In the currency markets, the U.S. dollar weakened as investors exercised caution ahead of a potential government shutdown, with Asian currencies broadly gaining, while the Euro firmed on dovish Fed expectations. 

Key Takeaways 

• Stocks Rally on In-Line PCE Data: Major indices climbed (S&P +0.6%, Dow +0.7%, with the S&P 500 climbing back toward recent all-time high after the August Core PCE Price Index came in steady at 2.9% year-over-year, meeting expectations and reinforcing the case for Fed easing. 
• Government Shutdown Looms: Investor focus is increasingly on the risk of a partial U.S. government shutdown this week, as lawmakers remain at an impasse over a funding deal, with a 72% probability priced in by Polymarket. 
• New Tariffs Largely Ignored: Markets shrugged off President Trump’s announcement of new tariffs on pharmaceuticals, trucks, and furniture, effective October 1st, focusing instead on the Fed outlook. 
• All Eyes on Fedspeak: With a quiet data calendar to start the week, the market’s attention is squarely on a heavy slate of speeches from influential Fed and ECB officials for policy clues.
• Gold Surges to New Record Highs: Gold prices broke above $3,800/oz to new all-time highs, supported by a weaker dollar, dovish Fed expectations, and safe-haven demand. 
• Major Currencies Rebound on Dollar Weakness:The U.S. dollar weakened, with the DXY index slipping as Asian currencies like the Yen, Won, and Yuan advanced, driven by concerns over a potential U.S. government shutdown. While EUR/USD pushing above 1.1700, GBP/USD rebounding, and USD/JPY falling.
• Bitcoin Bounces from Multi-Week Lows: The cryptocurrency is showing signs of life, climbing back towards $112,000 as data suggests large holders, or “whales,” are accumulating after last week’s sharp sell-off.
• Oil Prices Lower on Supply News: Crude oil prices opened lower as OPEC+ is expected to increase production and Iraq resumed key exports, adding to global supply. 
• Yields Rise Despite Dovish Data: Treasury yields edged higher, with the 10-year yield climbing to a three-week closing high of 4.18%, in a somewhat muted reaction to the day’s events. 

Market Overview 

Wall Street started the final week of September in a familiar bullish mood, with major indices climbing back towards their recent all-time highs. U.S. equity markets started the week on a positive note, with major indices climbing as investors celebrated an in-line inflation report that kept hopes for further Federal Reserve rate cuts alive. The August Personal Consumption Expenditures (PCE) Price Index, the Fed’s preferred inflation gauge, met economists’ forecasts, with the annual core rate holding steady at 2.9%. This benign print has reinforced the market’s conviction that the Fed will proceed with rate cuts in October and December. 

Index	Last	Change	% Change
S&P 500	6643.7	38.98	0.0059
Nasdaq	22484.07	99.37	0.0044
Dow Jones	46247.29	299.97	0.0065
German DAX	23,802.93	63.46	0.27%
FTSE 100	9,309.81	24.98	0.27%

The positive inflation data allowed investors to largely look past new tariff announcements from President Trump late last week, which targeted imports of pharmaceuticals, heavy trucks, and furniture. Sectors sensitive to the positive macro backdrop, such as gold stocks (NYSE Arca Gold Bugs Index +2.5%), oil service stocks, and utilities, turned in strong performances. The rally was broad-based, with European markets also posting solid gains. 

However, a significant risk event looms: a potential U.S. government shutdown. With a September 30th funding deadline just days away and lawmakers at an impasse, the probability of a partial shutdown is high. This is causing some caution in the market, as a shutdown could delay the release of critical economic data, including this Friday’s highly anticipated Nonfarm Payrolls report. This uncertainty is pressuring the U.S. dollar and providing a tailwind for safe-haven assets like gold.

Economic Calendar

The main economic event last Friday was the August PCE Price Index, which met expectations. The focus now shifts to the government shutdown deadline and Friday’s jobs report. 

• PCE Price Index (Aug): +0.3% m/m (in line), +2.7% y/y (in line). 
• Core PCE Price Index (Aug): +0.2% m/m (in line), +2.9% y/y (in line). 
• University of Michigan Consumer Sentiment (Sep – Final): Weaker than expected. Key 

This week key risk events: 

• U.S. Government Funding Deadline (Tuesday, Sept 30th) 
• U.S. JOLTS, ADP, ISM PMIs. 
• U.S. Non-Farm Payrolls (NFP) report for September (Friday) – Release could be delayed by shutdown. 
• Heavy Slate of Fed Speakers: Waller, Hammack, Williams (FOMC Vice Chair), Musalem, and Bostic are all scheduled to speak. 
• Multiple ECB Speakers: Lane, Schnabel, and Kazaks are among those on the docket.

Commodities, Treasuries and Currencies 

Gold is the undisputed star of the show, Gold prices surged to a new record high above $3,800 per ounce, with spot gold rising 1.5% to $3,814.91. The rally was fueled by a weaker U.S. dollar, strong expectations for Fed rate cuts, and safe-haven demand ahead of the potential government shutdown. Silver, platinum, and palladium also posted significant gains. Crude oil prices opened lower on news that OPEC+ is likely to increase production quotas and that Iraq has resumed key exports. However, WTI later clawed back losses to trade modestly higher near $65.09/bbl. 

Asset	Change	Unit	Last
WTI Crude	-0.6	USD/bbl	65.12
Gold	37.3	USD/oz	3846.3
EUR/USD	0.0026	USD	1.173
USD/JPY	-0.82	JPY	148.69
US 10-Yr Yield	-2.5 bps	%	0.04151

In the currency markets, the U.S. Dollar Index (DXY) fell -0.24% to 97.92, pressured by the looming shutdown risk and dovish Fed bets. The decline is being driven by the looming government shutdown risk and renewed bets on Fed rate cuts, with markets now pricing a 90% chance of an October cut. This weakness has allowed EUR/USD to climb above 1.1700, and GBP/USD to rebound from a seven-week low. The Japanese Yen also gained, pushing USD/JPY down towards 148.80. A notable $1.6 billion options expiry is located at the 1.1750 strike level for EUR/USD today. This level is situated between the 100-hour moving average (~1.1737) and the 200-hour moving average (~1.1765). This confluence of an options magnet and key technical levels could act as a significant pivot point, potentially containing price action during the London session.

U.S. Treasury yields declined in Asian trade but showed a lack of direction during the U.S. session, closing modestly lower. The 10-year Treasury yield fell about 2.5 basis points to 4.151%. Bitcoin rebounded, climbing 2.2% to near $112,000 as signs of whale accumulation offered some support after last week’s sharp sell-off. The digital asset space is seeing a relief bounce. Bitcoin has climbed over 2% to trade near $112,000, recovering from a three-week low. The move comes as data shows large investors accumulating the token after last week’s heavy liquidations.

Looking Ahead 

The market will be entirely focused on developments in Washington regarding the government funding bill. A last-minute deal could spark a relief rally, while a shutdown would increase uncertainty and could delay the release of Friday’s critical jobs report. Speeches from a multitude of Fed officials today and throughout the week will also be closely watched for any shifts in tone regarding monetary policy. This week’s JOLTS, ADP, and ISM reports will provide further clues on the economy’s health ahead of the pivotal NFP release. Gold has entered a parabolic phase, breaking a major psychological barrier. Traders will be watching to see if this powerful momentum can be sustained or if the overbought conditions will lead to a sharp pullback.