Bonds & Stocks
Stocks rose and bond yields fell as a key inflation gauge grew at a slower pace last month, giving the Federal Reserve some breathing room to address labor-market cooling. The S&P 500 was set to trim this week’s losses. Treasury two-year yields, which are more sensitive to imminent Fed moves, declined one basis point to 3.65%. The dollar wavered. Personal consumption expenditures for August excluding food an energy rose 0.2% from the month prior, in line with analyst expectations. The measure — often called the Fed’s preferred gauge of inflation — was up 2.9% on an annual basis.
Economy
Fed Chair Jerome Powell pointed to a cooling labor market to explain why officials lowered interest rates on Wednesday for the first time this year, but he made clear that the central bank remains vigilant on inflation as President Donald Trump’s tariffs continue to work through the economy. Fed Bank of Richmond President Tom Barkin said while unemployment and inflation have both moved away from the US central bank’s goals, he sees only limited risk of further deterioration on both fronts.
World
European diplomats warned the Kremlin that NATO is ready to respond to further violations of its airspace with full force, including by shooting down Russian planes. The warning was given at a tense meeting in Moscow, where British, French and German envoys addressed their concerns about an incursion by Russian fighter jets over Estonia. Kremlin spokesman Dmitry Peskov responded to the warnings by saying it's a "very irresponsible statement" and that no evidence has confirmed Russian airspace violations.