US Stocks Hold Ground After Hot Inflation – Dollar Jumps
US equities ended virtually unchanged overnight as hotter-than-expected inflation data dented expectations for near-term Fed rate cuts. The Dow Jones Industrial Average slipped 0.02% to 44,911, the S&P 500 edged up 0.03% to a fresh record high at 6,468, while the Nasdaq Composite eased 0.01% to 21,710.
The US dollar rallied sharply after Producer Price Index (PPI) data beat forecasts by 0.7%, lifting the DXY 0.37% to 98.30. Treasury yields jumped as well — the 2-year rose 5.7 bps to 3.732%, and the 10-year gained 5.2 bps to 4.285%.
Oil prices climbed to a one-week high ahead of today’s Trump–Putin summit in Alaska. Brent crude rose 1.89% to $66.83, while WTI crude gained 2.01% to $63.91. Gold slipped 0.61% to $3,334.79, weighed down by a stronger greenback.
PPI Shakes the Cut Trade
The latest PPI print dealt a blow to the Fed’s rate cut narrative — both headline and core inflation rose +0.9% m/m, far above the +0.2% consensus. This suggests that inflationary pressures remain stubborn in certain sectors of the US economy.
While a 25-basis-point cut in September remains priced in, October cut odds dropped by about 10% after the data. Dollar bulls seized control, with traders now looking to US Retail Sales later today for confirmation of additional upward pressure on the greenback.
Big Friday Ahead
Asia kicks off with Chinese Industrial Production (expected +6.0% y/y) and Retail Sales (expected +4.6% y/y), both of which could sway regional markets.
With France and Italy closed for holidays, European trading could see thinner liquidity, but the US calendar is packed:
- Retail Sales: +0.6% m/m expected
- Core Retail Sales: +0.3% m/m expected
- Empire State Manufacturing: -1.2 expected
- Michigan Consumer Sentiment: 61.9 expected
- Inflation Expectations: previous 4.5%
The spotlight remains firmly on the Alaska summit, where any market-moving remarks could set the tone into the weekend.
This market commentary is prepared by Spec FX, providing insights into global market movements and key economic developments.