Week 40: PCE Surprises, Jobs Miss: October Hike All But Off the Table

Weekly Summary

Week 40 (28 September – 2 October) opened the fourth quarter with markets navigating a volatile mix of geopolitical shocks, pivotal economic data, and corporate news. What looked set to be another difficult week for risk assets (triggered by oil surging on Monday after President Trump rejected Iran's Strait of Hormuz offer) was salvaged in the final sessions by two data releases that fundamentally changed the Fed outlook. August PCE inflation, released Wednesday, came in below consensus. Friday's September nonfarm payrolls report delivered a stark miss: just 29,000 jobs added versus the 90,000 expected, with the unemployment rate ticking up to 4.2%. The immediate market verdict was decisive: October FOMC rate hike odds collapsed from approximately 64% entering the week to roughly 17% by Friday's close.

The bond market responded forcefully. Treasury yields, which had been grinding to multi-decade highs all month (the 10-year had touched 5.289% at the end of Q3 on September 30) fell sharply on Friday following the payrolls data. The S&P 500 closed the week at 7,722.72, down approximately 0.27%, a modest loss that masked the dramatic intraweek swings. The Nasdaq was the week's clear winner, advancing approximately 1.2%, lifted by Nvidia hitting an all-time intraday high and by a strong Tesla delivery report. The Dow ended the week essentially flat.

For the Rivativ model portfolios, it was a quiet week by recent standards. Three of four portfolios outperformed the index on a relative basis. Combined weekly result: +0.04%, versus SPX -0.27%. October month-to-date: combined +0.90% versus SPX +0.93%, tracking the index closely through the first two trading days of October.