World markets are ending a poor third quarter on a somewhat positive note, clawing back some of their losses as the worst of the selling in bonds and stocks eases. The week saw US crude oil prices fall from yearly highs, helping to cool Treasury yields. The recoil in oil and bond yields in turn dragged the dollar down, and stock indexes experienced a second day of gains on Thursday. Furthermore, there is optimism from Beijing about a year-end summit between President Xi Jinping and U.S. President Joe Biden, which could pave the way for Xi’s trip to the U.S. in November. In Europe, inflation in the euro zone fell more than expected, suggesting that the European Central Bank’s interest rate hikes may now end.

Despite the positive market movements, uncertainty looms ahead. With a potential partial U.S. government shutdown on the cards from Sunday, attempts to avert it in Congress look set to fail. The Federal Reserve’s favored inflation gauge, the PCE, is due to be updated for August and is expected to show an uptick in the headline rate of inflation. However, the central bank’s colleagues continue to be equivocal about the chances of another rate rise this year, citing possible economic data outages due to the government shutdown. In the corporate world, Nike lifted the mood with its shares surging 8% after topping Wall Street estimates for first-quarter profit.

Looking ahead, US markets will be watching for key economic data, including the PCE inflation gauge, personal income and spending, as well as business surveys and consumer sentiment data. Additionally, there will be speeches by Federal Reserve officials and US Treasury auctions. The market’s direction will be influenced by these developments as investors navigate through the challenges of a potential government shutdown, central bank policy decisions, and corporate performance.

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