US Core PCE meets expectations at 2.9%

The Federal Reserve’s preferred inflation measure, the core Personal Consumption Expenditures (PCE) price index, rose 0.2% m/m and 2.9% y/y in August, aligning with forecasts and keeping the Fed on track for additional rate cuts. Headline inflation reached 2.7% y/y, up from July’s 2.6%. Personal income increased 0.4% while consumer spending surged 0.6%, both exceeding expectations. The savings rate climbed to 4.6%, demonstrating consumer resilience. Despite concerns about Trump’s tariffs impacting prices, the data showed minimal pass-through effects as companies absorbed costs through inventory management and other measures. Markets anticipate an October rate cut, following the Fed’s September quarter-point reduction to 4%-4.25%.

Abu Dhabi’s MGX investment fund has emerged as a major player in the USD 14bn TikTok US deal, joining tech giants Oracle and private equity firm Silver Lake as main investors controlling a 45% stake in the restructured platform. The consortium takes control of TikTok’s US operations serving 170 million users. The deal, approved by President Trump positions MGX alongside prominent American investors on a seven-member board (six Americans) overseeing the platform’s security and operations, while ByteDance retains less than 20% ownership to meet US national security requirements.

HH Sheikh Mohamed bin Zayed Al Nahyan met OpenAI CEO Sam Altman in Abu Dhabi on Saturday, to deepen collaboration on artificial intelligence research and real-world implementation. The discussions focused on integrating OpenAI’s expertise with the UAE’s strategy to build a robust AI ecosystem, supporting economic diversification and a knowledge-based society.

Today’s Economic Data and Events

16:30 Dallas Fed Manufacturing Activity. Sept Forecast: -1.6

Fixed Income

US Treasury yields were little changed on Friday as inflation data met expectations, reinforcing the Federal Reserve’s measured approach to monetary policy. The 2yr UST fell 2bps to 3.645% while the 10yr yield edged up 1bp to 4.183%.

FX

The US dollar weakened on Friday, with the DXY index falling 0.41% to close at 98.152. EURUSD fell 0.31% to 1.1698 while GBPUSD dropped 0.43% to 1.3393. USDJPY declined 0.21% to 149.43.

Equities

On Friday, all three major U.S. stock indexes closed higher, snapping a three-day losing streak. The Dow Jones Industrial Average rose by 0.7%, the S&P 500 gained 0.6%, and the NASDAQ Composite climbed 0.4%.

Locally, DFM and ADX closed up on Friday, rising 0.7% and 0.5% respectively.

Commodities

OPEC+ is likely to increase oil production in November, potentially matching October’s 137k barrel-per-day hike. Despite industry warnings of surplus, oil markets have absorbed additional supply well. The decision comes ahead of Saudi Crown Prince’s November meeting with President Trump. Brent and WTI closed up 1% on Friday at USD 70.13/b and USD 65.72/b