Core PCE just blinked. Rates didn't.
The Fed's favourite inflation gauge finally cooperated. The bond market didn't care.
Listen to the same-day episode — Ep. 073
Core PCE just blinked. Rates didn't.
The Fed's favourite inflation gauge finally cooperated. The bond market didn't care.
⏱️ ~4 min read
📊 Today's Numbers
Core PCE (Aug) ▼ 3.00% YoY: missed 3.30% forecast, hike odds drop
10-Year Treasury Yield ▲ 5.298%: near 19-year high despite soft print
Japan 10-Year JGB ▲ 3.10%: highest in roughly three decades
Micron Revenue (Q4 FY26) ▲ $54.23bn: beat by $3.16bn, AI memory surge
Brent Crude ▼ $96.76/bbl: down 1.3% on day, still ~51% above year-ago
Dow Jones (September) ▼ 4.30%: worst monthly loss of 2026
🏦 MACROECONOMIC
Photo: Miles Burke
The Fed's Inflation Gauge Blinked. Bond Markets Said "So What."
August PCE came in soft across the board, and for about four hours markets celebrated. Then yields crept back up and the S&P 500 closed in the red. The soft data is real. The relief isn't, quite yet.
Core PCE 3.00% vs. 3.30% expected — the miss slashed October hike odds from 51% to roughly 35–38% on the CME FedWatch Tool in a single session
Headline PCE 3.40% vs. 3.70% forecast, with the monthly print at 0.30% vs. 0.40% — Goldman Sachs now calls an October hike "unlikely," but still expects one in December
10-year Treasury ended at 5.298%, up 4 basis points on the day despite the cooler print — with the 30-year mortgage rate still above 7.50%, the people waiting to buy a house felt none of today's optimism
💬 Bond markets are effectively saying: one good month of PCE data doesn't close a 130-basis-point gap above the Fed's target. They're probably right.
📈 EQUITIES
Photo: Rafael Minguet Delgado
Micron Just Had the Most Remarkable Year in Semiconductor History
Revenue of $133 billion for the full year. That's up from $37 billion in fiscal 2025. In twelve months. The AI memory supercycle isn't a prediction anymore — it's a financial statement.
Q4 revenue of $54.23bn beat consensus by $3.16bn, with DRAM alone up 343% year-on-year to $39.8bn, driven entirely by high-bandwidth memory demand from AI data centres
Full-year non-GAAP EPS hit $75.52 versus $3.03 a year earlier — adjusted earnings grew roughly 25-fold in a single fiscal year, a number that sits oddly on a page
Q1 FY2027 guidance of $61.5bn is 7.9% above analyst forecasts, implying the acceleration isn't slowing; CEO Sanjay Mehrotra confirmed the company is working with Nvidia on the industry's first custom HBM implementation
💬 We're watching whether SK Hynix and Samsung respond with an aggressive pricing move — that's the one scenario that breaks the supercycle narrative before Micron's next print.
📉 BONDS
Photo: Daniel Trotta
Japan's Borrowing Costs Just Hit Their Highest in About Thirty Years. The World Should Notice.
Japan's 10-year yield crossing 3.10% isn't a footnote. Japan is the world's largest creditor nation, and for years its near-zero rates have quietly subsidised risk appetite globally. That era is ending.
Japan 10-year yield reached 3.10%, up 1.44 percentage points year-on-year, with the 30-year at 4.20% — levels that make domestic bonds genuinely competitive for the first time in a generation, raising the question of why Japanese investors would keep buying U.S. Treasuries at current spreads
Nikkei 225 fell 4.72% in Q3, snapping a five-quarter winning streak, as rising yields increase the cost of yen-carry trades that have underpinned global risk appetite
Shanghai Composite tumbled 6.16% in Q3, its worst quarterly drop since 2022 — China's markets are now closed for Golden Week, so there's no immediate policy lever to pull
💬 Thirty years of suppressed Japanese yields acted like a slow, invisible subsidy for global borrowing. Unwinding that doesn't happen quietly.
📰 Also Today
US stocks closed out a brutal September: The Dow fell 4.30% for the month — its worst monthly loss of 2026 — while the S&P 500 ended September at 7,651.54, roughly 2% below its all-time high; technology was the only S&P sector in the green for the month, up ~5%, leaving index-heavy retirement portfolios heavily concentrated in a single theme.
Brent crude eased to $96.76/bbl but remains about 51% above year-ago levels, with the EIA estimating Middle East production shut-ins at 6.7 million barrels per day in August — Standard Chartered has raised its oil price forecasts through 2027, citing thin supply buffers and persistent regional instability.
Gold rebounded 0.59% to $4,182.37/oz after the soft PCE print trimmed Fed hike odds, but the metal still posted its worst monthly performance since June, falling 4.68% in September as the 10-year Treasury yield near 5.30% kept eroding the case for non-yielding assets.
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Not investment advice. For informational purposes only.