Market Mondays: PCE steadies, gold at record, oil tests support, NFP in focus

After a week dominated by cautious Fed rhetoric, Friday’s US PCE inflation landed broadly as expected. Core PCE has effectively stabilised around 2.9% for a second month—awkward for policymakers, but not hot enough to derail the easing path that futures markets have been leaning toward. Equities reversed higher into the close and carried that momentum into Monday.

The Fed path from here

Officials continue to stress a meeting-by-meeting approach, yet market pricing still skews dovish: roughly a 90% probability of a rate cut in October and about two-thirds odds of another in December. A parallel, more structural debate lingers over whether a 2–3% inflation band would better fit the post-pandemic economy, reinforcing the idea that modestly above-target inflation can coexist with gradual easing to protect the labour market.

Late last week, guidance from Michelle Bowman acknowledged a softer labour backdrop and inflation not far above target. The takeaway for traders: the risk of “falling behind the curve” argues for cutting soon, even if the disinflation path isn’t perfectly linear.

As a result, US indices look resilient. The S&P 500 rebounded off its 20-day moving average and sits within reach of record highs. While bubble chatter persists, earnings growth has broadly matched price gains this year, leaving headline valuation multiples little changed and reducing the sense that prices have run away from fundamentals. With the VIX easing post-PCE, the burden of proof shifts to this week’s data: a clean run keeps the uptrend intact; a shocker would challenge the calm.

Friday’s NFP: three simple scenarios

Consensus points to a modest payrolls gain (near 51k) and unemployment around 4.3%. Some Fed watchers put the monthly “break-even” for a steady jobless rate at roughly 25–50k, so an in-line result endorses the slow-cooling narrative.

• In line / slightly softer: Supports risk assets and reinforces near-term cuts.
• Stronger than expected: Growth looks resilient; risk can still digest it if inflation anxiety doesn’t flare.
• Decisively weak: The problem case—raises growth worries and questions whether policy easing is already late.

S&P 500 daily chart

Past performance is not a reliable indicator of future results.

Gold and Oil

Gold set another record in Asian trade and remains a difficult short. Key supports include falling real-rate expectations, persistent credibility and policy-independence debates, and ongoing demand for macro hedges into event risk. Price action respects a rising channel with clear, stepping support; while plenty of good news is embedded, the structural bid remains in place—especially if US data meaningfully disappoints.

WTI’s rebound stalled near the 200-day moving average, with prices slipping back toward the $61.50 area—now a critical support that has attracted buyers’ multiple times. Recent pressure has been driven mainly by supply:

• Noisy signals around potential OPEC output changes.
• Prospects for the Iraq–Kurdistan pipeline via Turkey to resume flows of roughly 200k bpd.
• Lingering demand concerns tied to softer Chinese data.

A decisive break below $61.50 would put $60 in view; while above it, range-bound trade likely persists.

The week ahead: Eurozone CPI, US ISM—and the RBA

• Eurozone CPI (Wed, 1 Oct): Core seen near 2.3% y/y; headline may tick up on food prices. A moderate EUR-rates story unless there’s a surprise.
• US ISM Manufacturing & Services: Manufacturing expected to firm modestly; Services to hold above 50. The US dollar could be sensitive mid-week.
• RBA (Tue, 30 Sept): A hold near 3.6% is the base case. Australia’s monthly inflation indicator printed around 3.0% on the headline (trimmed mean near 2.6%), nudging markets to push a previously assumed December cut out to March. With employment softening on the margin, tone on inflation will matter most: a hawkish lean would support AUD and weigh on the ASX 200; a more relaxed stance would likely do the opposite.