Investors count down to the Federal Reserve’s September 17 -Monetary political decision; The markets expect a quarter -point frequency cutting that can trigger short -term volatility, but potentially fuel in the longer term across risk assets.
The economic background highlights the fed’s delicate balance law.
According to the latest CPI report released by the US Bureau of Labor Statistics on Thursday, consumer prices rose 0.4% in August and lifted the annual CPI rate to 2.9% from 2.7% in July, when shelter, food and gasoline pushed costs higher. CORE CPI also climbed 0.3%and expanded its stable pace in recent months.
Producer awards told a similar story: According to the latest PPI report, published on Wednesday, the heading of the PPI index slipped 0.1% in August, but remained 2.6% higher than a year earlier, while Core PPI advanced 2.8%, the largest annual increase since March. Together, the reports emphasize stubborn inflation pressure, even when growth slows down.
The labor market has been softened further.
NonFarm salaries increased by only 22,000 in August, with the federal government and the energy sector losing loss of jobs against modest modest gains in health care. Unemployment that was 4.3%, while participation in the workforce remained stuck at 62.3%.
Revisions showed that job growth in June and July was weaker than originally reported, which reinforced signs of cooling momentum. Average hourly earnings still increased 3.7% years over years and kept the salary pressure alive.
The bond markets are adjusted accordingly. Per. Data from Marketwatch is 2-year tax returns of 3.56%, while the 10th year is 4.07%, leaving the curve modestly the other way around. Futures dealers see a 93% chance of a 25 basic point cut, according to CME FedWatch.
If Bed limits its move to only 25 BPS, investors can respond with a “buy rumor, sell the news” as the markets have already priced in relief.
Shares test record levels.
S&P 500 closed Friday at. 6,584 after rising 1.6% for the week, it’s best since the beginning of August. The index’s one-month diagram shows a strong rebound from the late August August Recovery, which emphasizes Bullish atmosphere on the way into Fed Week.
Nasdaq Composite also noted five equal record heights ending on 22,141, powered by winnings in Megacap Tech shares, while Dow slipped below 46,000, but still booked a weekly progress.
Crypto and raw materials are collected with.
Bitcoin deals with $ 115,234, under its August 14, at all times high near $ 124,000, but still firmly higher in 2025, with Global Crypto Market Cap now $ 4.14 trillion.
Gold has risen to $ 3,643 per day. Ounce, near record highs, with its one-month diagram showing a stable upward course as investors prices in lower real yields and seeking inflation hedge.
Historically precedent supports the cautious optimism.
Analysis from Kobeissi-letter reported in an X-thread sent on Saturday with reference to Carson Research shows that in 20 out of 20 previous cases since 1980, when Fed reduced the rates within 2% of the S&P 500 heights, the index was higher one year later, average winnings of almost 14%.
The shorter term is less predictable: In 11 of these 22 cases, the shares fell in the month following the cut. Kobeissi argues that this time could follow a similar pattern-the original turbulence followed by the longer term gains as the interest rate relief reinforces the momentum behind assets such as shares, Bitcoin and gold.
The wider setup explains why dealers look closely on September 17.
Cutting speeds, while inflation edges higher and warehouses are hovering at items risking bulging credibility, yet staying on a wait that has already been priced to ease. Either way, Fed’s message of growth, inflation and its political prospects is likely to shape the field in markets for months to come.
