US equities marched higher overnight, with stronger-than-expected GDP data giving bulls more confidence to push indices into fresh record territory. The Dow Jones added 0.16% to 45,636, the S&P 500 gained 0.32% to 6,501, and the Nasdaq led the way, climbing 0.53% to 21,705.
The US dollar was on the back foot, sliding another 0.36% to 97.87 on the DXY, as traders continued to price in a September Fed cut. Bond yields diverged: the 2-year Treasury nudged higher to 3.629%, while the 10-year slipped to 4.203%.
Commodities were broadly firmer. Brent crude rose 0.41% to $68.33, while WTI gained 0.70% to $64.60, ahead of a fresh Ukraine update from President Trump. Meanwhile, gold extended its run to five-week highs, up 0.58% to $3,417.08, as safe-haven demand persisted.
Fundamentals Back in the Driver’s Seat
After months of markets being held hostage by geopolitics and tariff uncertainty, fundamentals are reclaiming the spotlight. With more clarity on tariff impacts and scale, traders are once again turning to economic data to shape rate expectations and positioning.
Recent US data continues to lean toward a September Fed rate cut, but all eyes are on tonight’s Core PCE print. A strong read would likely lock in market conviction for easing, while a miss could spark volatility across FX, rates, and equities.
As we head into the second half of the year, fundamentals are set to carry more weight than headline risks.
Inflation in the Spotlight Today
Traders will face a busy slate of inflation data across all three major sessions:
- Asia: Tokyo Core CPI printed in line at +2.5% y/y, slightly softer than last month but still supportive of near-term BoJ tightening expectations.
- Europe: Focus shifts to German state CPI releases (expected 0.0%) and Spanish flash CPI (expected +2.8%), both potential movers for the euro.
- US: The main event is the Fed’s preferred inflation gauge — Core PCE (exp +0.3% m/m), due in early New York trade. At the same time, Canada releases GDP, followed later by Michigan sentiment and inflation expectations.
Make no mistake — PCE is the headline act and will set the tone heading into the weekend.