Economic Indicators & Central Banks:
- Treasuries surged after a much cooler than expected CPI report that saw Fed funds futures price in a -25 bp rate cut for September, more than 2 quarter point moves over the rest of the year, and 3 cuts by the end of Q1 2025.
- Australian and New Zealand government bonds rallied, taking cues from their US counterparts.
- European stocks open muted, following a sharp decline in Asian equities driven by a significant drop in technology stocks. Despite this recent downturn, global stocks are on track for their 6th consecutive weekly gain, the longest streak since March, buoyed by expectations of Fed easing which have supported overall risk sentiment.
Asian & European Open:
- Wall Street was not as enthused, although it’s coming off of prior strong gains. The NASDAQ slumped -1.95% and the S&P500 slid -0.88% to 5584. Cash fled some of the safety of the mag 7. The Dow was up 0.08%.
- Disappointing earnings from Delta and PepsiCo weighed heavily.
- The Euro Stoxx 50 futures showed minimal change, mirroring the stability seen in US stock futures after a tech-driven selloff on Thursday.
Financial Markets Performance:
- The USDIndex took it on the chin, falling to 104.07 from the high of 104.99 on the dovish Fed outlook.
- A lot of the weakness came from JPY as USDJPY crashed 4-handles, as there were reports of intervention. The Bank of Japan conducted rate checks with traders, reinforcing the belief that authorities had intervened in the market on Thursday to support the currency.
- Oil prices rallied for a 3rd day in a row boosted by the US inflation which cooled broadly in June to the slowest pace since 2021. Bets rose that the Fed will start to reduce borrowing costs this quarter.
- Gold corrects some of yesterday’s gains, back to 2400.
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Andria Pichidi
Market Analyst
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