Fed hawks and rising yields keep markets cautious ahead of today's US inflation print
Bond yields are back in the driver's seat. A hawkish read from Fed officials pushed the US 10-year toward 5.24% and pressured risk sentiment into Tuesday's close, even as gold extended its rally and Asian equities mostly firmed overnight. The next catalyst lands this afternoon: August's PCE report, the Fed's preferred inflation gauge.
What moved
US equities closed lower on Tuesday — the S&P 500 slipped 0.17% to 7,670.84, the Dow eased 0.26%, and the Nasdaq gave back 0.09% — but futures point to a firmer open, up around 0.3%. Asia was more mixed: Japan’s Nikkei 225 jumped 2.0% to 66,826, China’s Shanghai Composite added 0.3%, while South Korea’s KOSPI slipped 0.4% and Hong Kong’s Hang Seng eased 0.2%. In FX, the Dollar Index pulled back slightly from a three-month high near 101.60 but held most of its gains; EUR/USD sits close to 1.1332, USD/JPY has slipped over 0.3% to around 156.70, and GBP/USD rebounded to roughly 1.3270 on a UK GDP revision. AUD/USD stayed pinned below 0.7000 after softer domestic inflation data. Gold extended Tuesday’s 1.5%+ rally to trade above $4,180, and Brent crude held near $96.4 with US–Iran tensions still a live undercurrent for the Gulf-adjacent supply picture. Crypto was the session’s weak spot: Bitcoin consolidated below $85,000 near $83,400 and Ether slipped alongside it, both pressured by the same rising-yield backdrop weighing on risk assets generally.
Why it happened
The common thread is the Fed. Chicago Fed President Goolsbee delivered one of the more hawkish central bank messages of the week, warning of a “high danger of overheating” from AI-driven productivity expectations — commentary the market read as pushing back against near-term rate cuts. That kept longer-dated Treasury yields elevated even as softer labour data (JOLTS openings fell to 7.07–7.08 million, below forecast, and Conference Board consumer confidence dropped to 81.9, its weakest since 2014) argued the other way. Markets are currently pricing a meaningfully hawkish path over the next year, which is doing more to set the tone than any single data point. Elsewhere, the Reserve Bank of Australia (RBA) raised its cash rate to 4.60%, China’s manufacturing PMI improved to 50.1 — back into expansion territory — and persistent US–Iran friction kept a mild geopolitical premium under oil. Net effect: a market caught between hawkish central-bank rhetoric and cooling consumer/labour signals, with today’s inflation data set to tip the balance one way or the other.
What to watch today
All times below are Saudi Arabia (KSA) time.
- 15:15US ADP Employment Report — the week's first major US labour print, released ahead of Friday's official payrolls data.
- 15:30US PCE Price Index (August) — the Fed's preferred inflation gauge; early nowcasts point to roughly 3.8% headline, 3.4% core.
- 15:30US Final Q2 GDP revision — the last look at second-quarter growth before attention shifts to Q3.
- 15:00Germany CPI (September, preliminary) — an early read on Eurozone-wide inflation before Friday's bloc-wide print.
- 17:00US ISM Manufacturing PMI (Thursday) — the next major input into the Fed's rate path.
- 15:30US Non-Farm Payrolls (NFP) (Friday) — the week's headline US labour market release.
See the full Economic Calendar for every upcoming release and its exact time.
In Focus
Gold's push above $4,180 keeps it within reach of its recent highs, with support building near the $4,100 area on this week's pullback low. EUR/USD's rebound attempt is running into resistance just above 1.1350, with the pair's broader range still anchored by this afternoon's PCE print. Full instrument-level charts and levels for both are on the way as our AI Technical Analysis pages go live.
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