Global Markets Weekly Update: Inflation, Tariffs, and Fed Policy in Focus

Source: Krish Capital Pty Ltd

Index Update

Markets are awaiting key inflation data that could guide the Fed’s next moves, after strong GDP and lower jobless claims slightly dampened hopes for aggressive rate cuts. Investors still expect 25 bps cuts in both October and December. On trade, President Trump unveiled steep new tariffs effective October 1, including 100% on branded pharmaceuticals, 25% on heavy trucks, 50% on cabinets and vanities, and 30% on upholstered furniture. Shares of Eli Lilly and Pfizer rose in premarket trading, while Trump also pushed for U.S. investors to take over TikTok’s domestic operations from ByteDance.

Market Movers

On Thursday, the top gainers were PepGen Inc. (+121.05%), followed by SciSparc Ltd. (+59.01%). On the contrary Zhengye Biotechnology Holding Limited. (-39.64%), and Super League Enterprise, Inc. (-30.52%) declined the most the same day.

Commodities Update

Oil prices climbed strongly this week, with WTI above $65 and Brent near $70 per barrel, both heading for their biggest weekly gains since early June. Supply concerns mounted as Ukraine’s strikes on Russian energy infrastructure pushed Moscow to restrict fuel exports and consider output cuts, while the U.S. urged Turkey to halt Russian imports. However, the return of Kurdish exports and tempered expectations for U.S. rate cuts capped some upside momentum.

Gold hovered near record highs around $3,750 per ounce, supported by safe-haven demand amid U.S. tariff threats and looming inflation data. Strong U.S. economic figures—lower jobless claims and upwardly revised GDP—have dampened hopes for an imminent Fed rate cut, though investors still expect policy easing later in the year. Markets now await the PCE price index for further clarity on the Fed’s next steps.

Macro Updates

PCE Inflation Expected to Edge Higher in August

The U.S. PCE price index is forecast to rise 0.3% month-over-month in August, up from 0.2% in July, while core PCE is expected to ease slightly to 0.2%. On an annual basis, headline PCE inflation is projected to climb to 2.7%, its highest in six months, with core PCE holding steady at 2.9%. The index remains the Federal Reserve’s preferred inflation measure.

Dollar Hits One-Month High on Strong U.S. Data

The dollar index climbed above 98.4 on Friday, its highest in a month, as stronger GDP growth and lower jobless claims tempered expectations for aggressive Fed rate cuts. Comments from Fed Chair Powell highlighted caution over labor market risks without committing to a fixed easing path. The dollar also gained support from looser policies abroad, with Sweden’s Riksbank cutting rates and the SNB holding at 0%. Gains were capped by U.S. shutdown risks and newly announced tariffs on medical and pharmaceutical imports.

Bonds Commentary

The 10-year U.S. Treasury yield climbed to 4.18% on Friday, rebounding from last week’s 4% low as strong GDP growth, higher durable goods orders, and lower jobless claims eased pressure for aggressive Fed cuts. While markets still broadly expect a 25 bps cut in October, over a third now see the Fed holding rates steady in December. Shorter-term yields rose more sharply than long-term ones, narrowing this quarter’s yield curve steepening. Attention now shifts to personal income and spending data, as well as risks from a potential government shutdown amid congressional deadlock.

Futures Update

U.S. stock futures were mixed on Friday as investors weighed new tariffs from President Trump and awaited key inflation data. At 05:25 ET, Dow futures rose 0.2%, S&P 500 futures edged up 0.1%, while Nasdaq 100 futures dipped 0.1%. Wall Street had fallen for a third straight session Thursday after stronger-than-expected economic data dampened hopes of further Fed rate cuts. Sentiment was also pressured by the risk of a government shutdown, with little progress on a stopgap funding deal.