In economic news, the Federal Reserve’s preferred measure of inflation posted its slowest pace of annual increase since November 2015. The personal consumption expenditures index, excluding food and energy, rose 1.3 percent in the 12 months through August, according to the Department of Commerce.
The Chicago PMI unexpectedly rose to 65.2 in September. The final read on consumer sentiment from the University of Michigan showed a slight decline from to 95.1 in September from 96.8 in August.
Treasury yields rose after the PMI report and after news former Federal Reserve Governor Kevin Warsh met with President Donald Trump and Treasury Secretary Steven Mnuchin Thursday. It’s not yet clear what they discussed, but The Wall Street Journal, citing a White House source, said the meeting was to discuss the job of heading the Federal Reserve. Fed Chair Janet Yellen’s term expires in February.
“Warsh is believed to be on the more hawkish side,” said Thierry Albert Wizman, global interest rates and currencies strategist at Macquarie.
Later Friday afternoon, The Wall Street Journal, citing a White House source, said Trump has also spoken to Governor Jerome “Jay” Powellfor the Fed chair position.
“If anyone other than Yellen [gets appointed] he’s probably going to have more of a deregulatory impulse,” said Eric Stein, co-director of global fixed income at Eaton Vance Management.
The 2-year yield traded near 1.48 percent, around nine-year highs hit earlier in the week. The yield climbed amid hopes of tax relief and after encouraging reports on business spending and Fed Chair Janet Yellen’s remarks that indicated the Fed will maintain a gradual pace of monetary policy tightening.
The 10-year Treasury yield traded near 2.33 percent, near its highest since July 13.
The U.S. dollar index traded near 93.06 after hitting Thursday its highest since August 18. The index is still more than 2.5 percent lower for the third quarter, tracking for its third-straight quarterly loss since 2008.
The euro weakened after hitting $1.1803, its highest against the dollar since September 26.
U.S. crude oil futures settled slightly higher at $51.67 a barrel after the weekly oil rig count rose by 6 rigs to 750. Oil rose 12 percent in the third quarter, its best in more than a year.
Gold futures for December delivery fell $3.90 to settle at $1,284.80 an ounce. Gold fell 2.8 percent in September for its worst month since November.
The German DAX gained 4 percent for the quarter for its first five-quarter win streak since 2014.
The iShares MSCI Emerging Markets ETF (EEM) closed up 1.2 percent, its first positive day in eight. EEM gained 8.3 percent for the quarter.
Global stock markets have climbed as underlying economic growth around the world has been solid.
It’s the “synchronized global recovery,” Ben Pace, chief investment officer at HPM Partners, said of stock markets’ run higher. “I don’t think there’s any meaningful economy in the world that’s in recession right now.”