Weekly Market Commentary September 29, 2025

WEEK IN REVIEW

The week began with key sentiment data from the S&P Global Manufacturing and Services Purchasing Managers’ Indices (PMIs). Both readings came in slightly below market expectations and last month’s figures, suggesting some softening in forward-looking sentiment. However, with Manufacturing at 52.0 and Services at 53.9, both remain above the 50 threshold, signaling continued expansion in economic activity rather than contraction.

Housing Market Strength Surprises

Midweek brought encouraging news from the housing sector. Revised building permits data erased some of the prior week’s disappointment, while new home sales surged to 800,000, well above the 650,000 forecast. This represented a 20.5% month-over-month (MoM) increase compared to last month’s -1.8% decline. Similarly, existing home sales slightly beat expectations at 4.00M versus 3.96M; however, home sales slipped marginally by 0.2% MoM. Collectively, these reports underscore resilience in the U.S. housing market, providing an important proxy for consumer confidence and willingness to commit to large purchases.

Inflation Data in Focus

Friday’s spotlight was on the Fed’s preferred inflation gauge: core and headline Personal Consumption Expenditures (PCE). Both came in as expected, with core PCE at 2.9% year-over-year (YoY) and headline at 2.7% YoY. While these figures reinforce the narrative of inflation moderating, they also highlight its persistence near 3%, well above the Fed’s 2% target. This stickiness suggests the Fed will likely maintain its easing bias but proceed cautiously. Supporting this view, University of Michigan data showed consumer inflation expectations ticking lower for both 1- and 5-year horizons, though the 1-year expectation remains elevated at 4.7%. Consumer sentiment and expectations indices also came in slightly below forecasts, reflecting tempered optimism.

Quick Hits

• Durable goods orders (both headline and core) exceeded forecasts, signaling robust business investment in big-ticket items

• Treasury auctions for the 2-, 5-, and 7-year notes were broadly in line with prior results, leaving the belly of the curve relatively stable

Click HERE to read more.