Top 3 Economic Stories this Week

PCE data in the US

The U.S. Personal Consumption Expenditures (PCE) inflation came in for the month of August this week. Many Economists had predicted the +0.3% month on month statistic that was revealed. Meanwhile, the 2.7% year on year revelation for the US calmed some fears of the economy overheating. Despite the hope that data brought, markets ended the week with weekly losses across the S&P 500, Nasdaq and Dow Jones. The debate around the Fed's future decisions continued, are additional cuts on the horizon? Or is the threat of inflation too large?

Records for US Equities, but Dollar Weakens

The 22nd of September saw US equities hit record highs after Nvidia announced investment in AI infrastructure with OpenAI. The gains were consequently led by tech stocks. Investors moved towards gold this week (which rose to highs), weakening the dollar against major currencies. Some investors remain cautious over valuation stretches in parts of the AI sector.

Goodhart's Law in the UK

Analysts referenced Goodhart's Law in the context of the UK, this week. The "law" suggests that once a measure becomes a target, it loses its effectiveness as a measure altogether. Critics suggests that in the UK, policymakers are relying too heavily on quantitative targets such as inflation and productivity goals. Analysts stress that instead of addressing the deeper structural issues that are at hand, institutions and policymakers may focus on "hitting targets" instead - distorting their true goals. Some commentators have raised the idea that UK policy is becoming too "reactive", off the back of this.

Policy Pulse: Fed Outlook

A week onwards, the rate cut by the Fed still remains a central topic of course. Markets are now watching the Fed closely, looking for anything they can find out on what the next move may be. The Fed's minutes are due soon, and are widely anticapted to reveal any opinions of officials about further cuts this year. Meanwhile, a looming US government shutdown has threatened to delay economic data such as that of employment stats. This could halt any Fed decisions as they have stressed their "data-dependence". We expect a continued Fed message of caution, as they juggle the macroeconomic factors of unemployment and inflation.

Industry Spotlight: AI

Investor sentiment in tech boomed fater Nvidia's announcement of an up to $100bn investment to supply AI infrastructure to OpenAI. The capital flows into AI continue to surpass monumental numbers, as global AI investment has exceeded $350bn in 2025. Further effects could be seen on semiconductor stocks as they benefited from the expectations of continued demand from AI and data centres - that said, geopolitical tech restrictions and supply chain issues are a very prominent issue for hardware producers. A Reuters "Breakingviews" piece caught our eye this week - as they argued that all the hype around AI could lead to overvaluation, once more questioning the possibility of an AI bubble. Q3 earnings season is coming up, and with growing speculation on the monetisation of AI, investors will be looking out for reports and the trends they reveal across the industry.