Global equity markets higher, US averages at records, Fed rate cut expected

Macroeconomic/ geopolitical developments

• US equities hit or neared record highs while gains across Europe, Japan, and China helped lift global benchmarks, extending a broad rally supported by AI optimism and falling bond yields.

• August inflation rose as expected, with CPI at 2.9% and core steady at 3.1%, while softer producer prices, weaker labor market data, and falling sentiment strengthened expectations for a Fed rate cut next week.

• The Fed’s September meeting is in focus, with markets expecting a quarter-point cut (and slim odds of a larger move), updated projections, and Powell’s guidance to set the tone for rates, yields, and markets amid cooling labor conditions and sticky inflation.

Global financial market developments

• US and global equity averages were notably higher with US indices at or near record levels.
• US and European bonds were notably lower on the week
• The US Dollar Index is towards the bottom of a multi-week range.
• Gold futures consolidated near the record high.
• Oil futures prices hovered near multi-month lows.

Key this week

Central Bank Watch: It will be an eventful week on the central bank front, headlined by the Federal Reserve’s Policy Decision, Economic Projections, and Press Conference on Wednesday. The Bank of Canada will also announce its Rate Decision the same day, followed by the Bank of England’s Policy Statement and Minutes on Thursday, and the Bank of Japan’s policy update on Friday.

Macro Data Watch: The key release this week is US Retail Sales on Tuesday, while other highlights include Chinese Retail Sales on Monday, Canadian and UK CPI on Tuesday and Wednesday, and both UK and Canadian Retail Sales on Friday.

Steve Miley (The Market Chartist)

Editor in chief

Steve Miley is the Market Chartist and has 32 years of financial market experience and as a seasoned expert now has many responsibilities. He is the founder, Director and Primary Analyst at The Mar... Continued