Risk-on sentiment dominated as the S&P 500 hit record highs at 6,173, while gold slipped 1.65% to $3,273.67/oz, signaling reduced crisis hedging flows. The dollar failed to attract defensive flows, redirecting capital into higher-yielding equities and technology sectors, weakening its support.
Mixed PCE Data Sparks Stagflation Worries
Friday’s economic data showed core PCE rising 0.2% m/m (2.7% y/y), above expectations, while personal income fell 0.4% and spending slipped 0.1%. Markets interpreted these numbers as evidence of tariff-induced stagflation rather than healthy demand-driven inflation.
Despite an improved University of Michigan sentiment reading at 60.7, the decline in income and spending underlined economic fragility, limiting the dollar’s ability to rally on inflation signals.
Federal Reserve Pivot Shifts Yield Outlook
Fed Vice Chair Bowman’s dovish comments on…
