Economists expect annual inflation to come in at 2.8%, a hair above August's 2.7%, with monthly growth stuck at 0.3%. Core PCE is seen holding at 2.9%. The numbers would not usually inspire drama. Yet, with the Fed's December 10 meeting promising to be among its most contentious in years, investors have imbued today's report with near-cosmic importance. Hard data may either vindicate that feeling - or reveal, once more, that sentiment is a terrible economist.

Markets currently assign an 87.2% probability that the Fed will cut rates this month. Traders even expect a second quarter-point cut by June 2026. But policymakers are divided. Inflation hawks point to a labour market that refuses to wilt. Jobless claims have touched their lowest level in more than three years, corporate layoffs are rising only gradually, and secondary indicators show little sign of a hiring slump. Doves counter that the economy's resilience may now be weakening at the edges, turning "hawkish cuts" into what might soon look like ordinary easing.

The Fed's caution stems from more than habit. Inflation, it fears, is still being pumped up by tariffs and fiscal stimulus, and could even accelerate if handled carelessly. 

Private-sector data, too, suggest inflation remains nearer 3% than the Fed's vaunted 2%. Yet markets remain oddly chipper. All three major U.S. stock indices are sitting on modest weekly gains; the S&P 500 is within 1% of a record high. Small-cap stocks, usually the first to cheer cheaper borrowing, have rallied 1.2%, outpacing the broader market.

This morning was quite busy in corporate news. Warner Bros. Discovery shares rose more than 3% after Netflix agreed to buy its film and TV studios and streaming assets for $72 billion, a sum suggesting that consolidation in entertainment remains a growth industry. In exclusive parallel negotiations, the two companies are also hashing out a deal that could merge Warner's studios and HBO Max streaming business with Netflix's empire, reshaping media all over again. Netflix shares, however, fell 4.4% on the news.

Elsewhere, Hewlett Packard Enterprise plunged about 10% after weak revenue forecasts blamed on customers delaying AI-server orders into the second half of the year. Oklo, a nuclear-tech firm, dropped 5% after announcing a $1.5 billion share sale. DocuSign raised its annual outlook thanks to subscription growth yet still fell 5%. Markets have a knack for rewarding good news selectively.

Other firms fared better. Ulta Beauty raised its guidance and saw shares jump 6.9%. Meta Platforms, shifting spending toward AI wearables and trimming its metaverse ambitions, rallied.

Meanwhile, Apple faces a wave of executive departures: a general counsel, the head of policy, a top designer poached by Meta, the head of AI strategy, a COO and a CFO shifting roles. The iPhone giant may not be in crisis, but it is in flux, and rivals sense their moment.

Ahead of the PCE print, the dollar weakened. Gold climbed on the weaker dollar and steady expectations of a Fed cut next week.

Across the Atlantic, the eurozone has produced rare good news. GDP grew 0.3% in Q3 - faster than earlier estimates - and 1.4% year-on-year, helped by rebounding investment.

In the Asia-Pacific region, Japan erased yesterday's gains with a 1.2% drop. Mainland Chinese and Hong Kong markets rebounded, while South Korea advanced once again, buoyed by renewed domestic enthusiasm for equities following a series of incentive policies. The KOSPI is up 68% year-to-date, making it the most prolific among major global indices. India and Australia also posted modest gains. As for Europe, indices are in the green. Wall Street futures are flat ahead of the PCE report.

Today's economic highlights:

On today's agenda: household spending in Japan and factory orders in Germany; In Canada, the hourly wage rate for permanent employees year-over-year; In the United States, non-farm payroll changes, the unemployment rate, durable goods orders, factory orders, and the University of Michigan sentiment. See the full calendar here.

  • Dollar index: 99,021
  • Gold: $4,228
  • Crude Oil (BRENT): $63.18 (WTI) $59.58
  • United States 10 years: 4.08%
  • BITCOIN: $91,156

In corporate news:

  • Teledyne Technologies' FLIR Defense unit secured a $42.5 million drone contract from the U.S. Marine Corps under the Organic Precision Fires-Light program.
  • Aptiv announced the appointment of Håkan Agnevall to its board of directors.
  • Netflix will acquire Warner Bros Discovery's film, TV studios, and streaming unit for $72 billion in a cash-and-stock deal, marking a major consolidation in Hollywood.
  • Natera acquired Foresight Diagnostics in a deal worth up to $450 million, combining $275 million in stock upfront with $175 million in potential earnouts.
  • Southwest Airlines lowered its full-year EBIT forecast to $500 million due to impacts from the U.S. government shutdown and rising fuel costs.
  • ITT is acquiring SPX Flow from Lone Star Funds in a $4.8 billion cash-and-equity deal to expand its aftermarket business.
  • Cloudflare restored its dashboard services after a brief outage disrupted access to Coinbase and Claude AI, attributing the issue to a firewall configuration change.
  • Bristol Myers-Squibb received expanded FDA approval for its CAR T-cell therapy Breyanzi to treat relapsed or refractory marginal zone lymphoma.
  • Ocado will receive a $350 million payment from Kroger due to the closure of three robotic warehouses and the cancellation of one planned site in their U.S. fulfillment network.
  • Tesla launched a lower-cost variant of its Model 3 in Europe to bolster sales amid stiff competition and slowing EV demand.
  • Amazon paid €180 million to settle an Italian probe into alleged tax fraud and labor violations, ending a legal investigation tied to its logistics unit.
  • Ford recalled nearly 109,000 Escape vehicles in the U.S. due to liftgate hinge issues and another 12,000 Lincoln MKT units over door trim concerns.
  • Visa is relocating its European headquarters to a 300,000 sq ft office space in London's Canary Wharf.
  • Thermo Fisher has entered into an agreement to sell, distribute, and manufacture GENinCode's CARDIO inCode-Score, a polygenic risk score test designed for predicting and preventing coronary heart disease.
  • Google is expanding its AI capabilities and strategic partnerships, launching new services like Gemini 3 Deep Think Mode, while also facing regulatory scrutiny and EU feedback requests regarding its advertising practices and safety regulations.
  • Chevron and its Gorgon joint venture partners have committed to a $2 billion AUD investment for the Stage 3 development of the Gorgon natural gas project.

Analyst Recommendations:

  • Apa Corporation: Johnson Rice upgrades to accumulate from hold and raises the target price from USD 35 to USD 40.
  • Commercial Metals Company: JP Morgan upgrades to overweight from neutral with a price target raised from USD 64 to USD 78.
  • Conocophillips: Johnson Rice downgrades to hold from accumulate and reduces the target price from USD 108 to USD 105.
  • Ge Vernova Inc.: William O'Neil & Co Incorporated initiates coverage with a buy recommendation.
  • Humana Inc.: Jefferies upgrades to buy from hold and raises the target price from USD 253 to USD 313.
  • Mid-America Apartment Community, Inc.: Scotiabank downgrades to sector perform from sector outperform and reduces the target price from USD 146 to USD 142.
  • Mp Materials Corp.: Morgan Stanley upgrades to overweight from equalwt with a price target raised from USD 68.50 to USD 71.
  • National Storage Affiliates Trust: Morgan Stanley upgrades to market weight from underweight with a price target raised from USD 30 to USD 32.
  • Newmont Corporation: BNP Paribas downgrades to neutral from outperform and reduces the target price from USD 107 to USD 97. 
  • Robert Half Inc.: BNP Paribas downgrades to underperform from neutral and reduces the target price from USD 42 to USD 22.
  • Rollins, Inc.: Barclays upgrades to overweight from market weight and raises the target price from USD 60 to USD 72.
  • Synchrony Financial: Baird downgrades to neutral from outperform with a target price of USD 82.
  • Unity Software Inc.: Wells Fargo upgrades to overweight from equalweight and raises the target price from USD 42 to USD 51.
  • Apple Inc.: CLSA maintains its accumulate recommendation and raises the target price from USD 265 to USD 330.
  • Ciena Corporation: JP Morgan maintains its overweight recommendation and raises the target price from USD 140 to USD 215.
  • Coherent Corp.: Jefferies maintains its buy recommendation and raises the target price from USD 160 to USD 205.
  • Lumentum Holdings Inc.: JP Morgan maintains its overweight recommendation and raises the target price from USD 235 to USD 350.
  • Macy's, Inc.: Evercore ISI maintains its in-line recommendation and raises the target price from USD 14 to USD 21.
  • Marvell Technology Group Ltd: CITIC Securities Co Ltd maintains its buy recommendation and raises the target price from USD 87 to USD 120.
  • Sentinelone, Inc.: Citizens maintains its market outperform recommendation and reduces the target price from USD 29 to USD 23.
  • Strategy Incorporated: Cantor Fitzgerald maintains its overweight recommendation and reduces the target price from USD 560 to USD 229.