U.S. Tightens, China Holds: Markets await PCE data
China’s central bank kept rates steady, with the one-year LPR at 3.1% and the five-year at 3.6%, amid yuan weakness

Gold prices held above $2,600
WTI crude marked its fifth consecutive session of declines
Silver continued its losing streak, trading around $28.90 per troy ounce
China
The People's Bank of China (PBOC) kept its benchmark lending rates unchanged, with the one-year Loan Prime Rate (LPR) steady at 3.1% and the five-year LPR at 3.6%. This decision reflects Beijing's limited room for monetary policy adjustments amid yuan depreciation. Despite these constraints, Chinese equities outperformed regional peers, with smaller weekly losses driven by optimism surrounding the government's plans for increased fiscal spending in 2025. The PBOC's stance underscores expectations of more robust fiscal interventions as monetary flexibility remains constrained.
In the U.S., futures extended their decline as Congress rejected a spending bill backed by former President Trump, heightening concerns of a potential government shutdown. The Federal Reserve's hawkish position on 2025 interest rate cuts added to the cautious mood, keeping Treasury yields elevated and bolstering the U.S. dollar.
Commodities
Gold prices (XAU/USD) hovered above $2,600 during early European trade on Friday, supported by geopolitical risks and fiscal uncertainty in the U.S. However, the precious metal's gains were tempered by high Treasury yields and a strengthening dollar, which continue to attract investors away from non-yielding assets. Traders are now focused on the U.S. Personal Consumption Expenditure (PCE) Price Index for fresh market drivers.
Silver (XAG/USD) extended its losing streak, slipping to $28.90 per troy ounce in Asian trade after hitting a three-month low of $28.74 in the previous session.
Meanwhile, crude oil prices (WTI) remained under pressure, marking a fifth consecutive session of losses. WTI traded near $68.90 per barrel, as a robust dollar dampened demand by making oil more expensive for buyers using other currencies.
Key Data Ahead
The U.S. PCE inflation report and Michigan consumer sentiment data are in focus, with expectations of a slight uptick in annual PCE inflation to 2.5% and core PCE to 2.9%. Across the Atlantic, UK retail sales and German Producer Price Index (PPI) data will provide further insight into consumer behavior and inflationary trends in Europe.
As markets navigate a mix of policy signals and fiscal uncertainties, investors remain on edge, balancing cautious optimism with the need for clarity on key economic indicators.