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Morning Macro 29 September
Poland scrambled jets and briefly shut airspace on Sunday after a Russian strike on Ukraine that Kyiv said dragged on for more than 12 hours. In Washington, congressional leaders meet Trump today with the clock ticking toward Wednesday’s shutdown deadline. Democrats want healthcare subsidies extended, Republicans want talks delayed – brinkmanship that risks rattling markets further. Trump has also ordered the National Guard into Portland for two months, triggering a lawsuit from Oregon calling the move unlawful.
The dollar is on the back foot, with Morgan Stanley warning investors are underestimating risks in USD/JPY. The bank advises hedging with options into a busy week that features jobs data, potential US shutdown and Japan’s ruling party leadership race. The yen is leading G10 this morning, up 0.5% at 148.67, after BOJ’s Noguchi sounded more hawkish than expected, stoking further speculation of an October hike. JGB futures slipped in response. (Figure 1)

Positioning in yen is split: asset managers lifted JPY longs to +79k, while leveraged funds expanded shorts to -63k. (Figure 2)
Safe-haven flows are also powering metals. Gold hit a new record at $3,819/oz this morning. Prices are 1% higher today after last week’s 2% gain, with support from heavy ETF demand (Figure 3), a weaker dollar, lower 2-year yields and market pricing for almost two Fed cuts by end-2025. Silver extended Friday’s 2% rally with another 2.1% jump to $47.04, supported by tight physical supply and solar demand, though breaks above $47 have proved short-lived. Silvers back outperforming, sending the gold/silver ratio 81.53.
Corporate profitability data highlights the yawning gap between US and Chinese firms. Tradable-goods companies in the US posted average margins of 12.4% in 2024, versus 4.9% in China according to Bloomberg data. High-tech leads the spread: US communications equipment at 22.5% vs China 3.3%, hardware at 20.6% vs 3.0%, and pharma at 22.6% vs 7.4%. Construction and household products also show double-digit gaps, mostly reflecting weak Chinese demand. Margins in consumer goods like textiles (9.6% vs 8.2%) and leisure equipment (4.6% vs 2.2%) are much closer. (Figure 4)
Top heaviness of US stocks continues to spiral, as the top 10% of stocks account for 78% of total US market cap – a record! S&P 500 recovers from its 3-day decline, looks to be consolidating near all-time highs. After Turkish Airlines’ commitment to buy over 200 Boeing planes, Boeing share price jumped to over $220 again, up more than 3.6% in Friday trading.
Data today: Spain inflation, EA economic sentiment, India industrial production, US pending home sales.

Morning Macro Friday 26th September
Trump announces 100% pharma tariffs from 1 October, except for companies building their manufacturing plant in the US. Pharma shares like Astrazeneca and GSK fall around 1%. Trump also revealed tariffs on some very… niche… goods: 50% on kitchen cabinets, bathroom vanities and associated products, 30% on upholstered furniture and 25% on heavy trucks. Bloomberg says these new tariffs could raise average tariff rates by 3.3%.
US economic data revised higher. GDP expanded at a 3.8% annualised pace in Q2, above 3.3% in the previous estimate, to the fastest in nearly two years. This was powered by 2.5% consumer spending and a blistering 7.3% jump in business investment, led by record outlays on intellectual property and data centres – the backbone of the AI boom.
After a tariff-driven contraction in Q1, the economy has snapped back with force. Business spending is surging, households are still buying, and layoffs remain rare. Markets were less impressed – stocks fell and yields eased – but the picture is clear: America’s growth engine is still very much switched on.
Bets on US recession have dropped from a high of over 60% early this year to 6% now on Polymarket. (Figure 1)
Fresh labour market data revealed jobless claims fell to their lowest since mid-July and unemployment claims slipped by 14k to 218k, far below expectations. Most firms are clinging to workers despite slower hiring, keeping the labour market cooler but intact. Markets now pricing less Fed cutting after strong macro prints in the US, with OIS now pricing under 40 bps. They also expect the Fed’s neutral rate – where policy is neither boosting nor slowing growth – to settle near 3%, higher than before.
The repricing briefly lifted 10-year yields to a three-week high near 4.1%. Positioning data shows investors hedging both more aggressive and less aggressive Fed outcomes, with heavy activity in SOFR options targeting small cuts. (Figure 2)

S&P 500 begins to rollover, dropping for 3 straight sessions for the first time since late August. In the week to 17 Sep, equity funds absorbed $68.4bn, the biggest weekly inflow of 2025, with a single S&P 500 ETF taking $30bn. Bond funds added $14.3bn (YTD >$600bn), alternatives gained $8.2bn (crypto $3.8bn), and EM equities drew $7.6bn.
But markets remain confident as investment grade credit spreads are near 27-year lows. (Figure 3) Is default risk low or is the market becoming complacent?

Japanese inflation came in cooler than expected, with Tokyo core CPI came at 2.5% y/y in September, below consensus of 2.8%. The headline figure was steady at 2.5% too, after a downward revision for August.
Data today: PCE, Canada GDP, Christine Lagarde speech