05.12.25 - Inflation prints - finally released

The September inflation figures, the Fed’s preferred gauge, were finally released.
Core PCE inflation and PCE inflation came in at 2.8% YoY, slightly below expectations of 2.9% resp. in-line with 2.8%, offering a modest sign of cooling. On a monthly basis core PCE inflation was 0.2% while PCE inflation remained at 0.3%, both in-line with analysts expectations.

Markets: a brief jump after the release

• Equities giving up earlier gains

• Bonds: yields move higher — 10-year yield at 4.13%

• Gold: remains above USD 4’250/oz level

• USD: almost unchanged

• Cryptos: falling broadly with Bitcoin below USD 89k

My View: Today’s PCE release doesn’t materially shift the picture for the Fed. Inflation is cooling slightly, however remains above the level needed to justify an immediate rate cut.

Markets were hoping for a clearer disinflation signal, but instead received another “not good enough, not bad enough” print.

The bigger story remains the ongoing fragility beneath the surface. Positioning is still stretched in several areas, and liquidity pockets are thinning. Any disappointment, whether on data or policy, could trigger outsized reactions. This is not a market trading on conviction, but on hopes and fears.
Until there is a decisive shift in inflation or labour data, volatility could see spikes and the risk of sharp swings persists.

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