US equities posted a mixed performance overnight as softer-than-expected Producer Price Index (PPI) data boosted expectations for Federal Reserve rate cuts before year-end. The Dow Jones Industrial Average slipped 0.48% to 45,490, while the S&P 500 and Nasdaq both notched fresh record highs, powered once again by the artificial intelligence theme. Oracle stole the spotlight, surging an eye-catching 36%. The S&P closed at 6,532 and the Nasdaq at 21,886.
Bonds and Dollar Reaction
Treasuries firmed following the data, with the 2-year yield easing 1.2bps to 3.544% and the 10-year yield sliding 3.9bps to 4.045%. Despite lower yields, the US dollar held steady, with the DXY index ticking 0.02% higher to 97.81.
Commodities were resilient: Brent crude rose 1.66% to $67.49 and WTI gained 1.64% to $63.66, amid fresh geopolitical concerns. Gold also attracted safe-haven flows, climbing 0.39% to $3,640.38, just shy of all-time highs.
CPI Takes Centre Stage
Markets are now pricing in around 75bps of Fed cuts by year-end, with a 92% chance of a 25bp reduction next week. But all eyes turn to tonight’s CPI release, widely seen as the real catalyst.
- Forecasts: +0.3% m/m for both headline and core CPI
- Annual inflation: expected at 2.9% y/y
A softer reading would strengthen the case for three cuts this year, likely pressuring yields and the dollar further. However, stickier inflation could quickly unwind some of those bets and trigger sharp reversals.
Huge Hour of Power Ahead
Traders face a packed calendar, especially during the critical London–New York crossover window:
- Asia: RBNZ’s Christian Hawkesby speaks in Auckland
- Europe/US overlap:
- ECB rate decision just 15 minutes before US CPI
- US weekly jobless claims released simultaneously with CPI
- ECB press conference 15 minutes later
This clustering of high-impact events could unleash significant volatility, with EURUSD particularly primed for fireworks. For markets, it’s shaping up to be a massive “Hour of Power.”
Spec FX Insight
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