U.S. Markets Today: Inflation On Script, Spending Firm, Confidence Softer Into Quarter-End

Friday, September 26, 2025 (ET) delivered a familiar soft-landing mix for the U.S. economy. The Fed’s preferred gauge, core PCE, rose 0.2% month over month in August and 2.9% year over year, matching expectations.

Headline PCE increased 0.3% on the month and 2.7% on the year. Under the hood, personal income advanced 0.4% while personal spending climbed a brisk 0.6%; real consumption rose 0.4%, signaling steady demand as the quarter wraps.

Consumer sentiment, however, ended September on a more cautious note. The University of Michigan survey showed headline sentiment at 55.1, current conditions at 60.4, and expectations at 51.7.

Short-term inflation expectations eased to 4.7% for the next year, while five-year expectations ticked up to 3.7%—a nuance likely to keep policymakers attentive to longer-run price psychology even as realized inflation moderates.

Policy watchers had a full slate of Fed communication to parse, with remarks from Richmond Fed President Thomas Barkin in the morning, Governor Michelle Bowman early afternoon, and Atlanta Fed President Raphael Bostic later in the day.

Steady Spending and Cooling Inflation Shape Q4 Outlook

The Atlanta Fed’s GDPNow model was due for a midday update after holding at 3.3% for third-quarter growth in the prior estimate. Energy and positioning data rounded out the U.S. calendar.

The Baker Hughes rig count was slated for the early afternoon, offering a read on drilling activity heading into year-end. After the closing bell, traders looked to weekly CFTC commitments of traders for a snapshot of speculative positioning across major asset classes.

Bottom line: August PCE kept the disinflation narrative intact while consumption stayed resilient—an alignment consistent with gradual, not urgent, policy easing.

With quarter-end upon us, the combination of steady spending, softer sentiment, and a heavy dose of Fed speak set the tone for how markets frame the path into Q4.