Futures Steady, Rate Cut Bets Grow Amid Mixed Economic Signals

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Index Update:  U.S. stock futures were flat as investors awaited PPI and jobless claims data that could shape Fed policy expectations. Earlier, softer consumer inflation boosted hopes for a September rate cut. The Dow led gains with a 1% rise, while the S&P 500 and Nasdaq posted modest advances. Most S&P sectors climbed, driven by materials, healthcare, and consumer discretionary, while AMD jumped 5.4% and Paramount Skydance surged 36.7%; major tech names like Nvidia, Tesla, and Meta edged lower.

Market Movers:  On Wednesday, the top gainers were Bolt Projects Holdings, Inc (+556.88%), followed by WEBTOON Entertainment Inc. (+81.20%). On the contrary MasterBeef Group (-47.82%) ProFrac Holding Corp. (-42.56%) declined the most the same day.

Commodities Update:  Oil prices rebounded after a two-day decline, with WTI near $63 and Brent around $65.8 per barrel, supported by geopolitical risk ahead of U.S.-Russia talks on the Ukraine war. However, gains were limited as prices hovered near two-month lows due to oversupply concerns following a bearish IEA forecast of a record surplus by 2026 and U.S. data showing a surprise inventory build, signaling weak demand. Gold extended its rally toward $3,370 per ounce, driven by expectations of Fed rate cuts after soft inflation data and labor market weakness. Additional support came from geopolitical tensions ahead of the Trump-Putin meeting, with markets now pricing in a 25 bps cut in September and some bets on a 50 bps move.

Macro Update:  US Producer Prices Seen Rebounding in July

Producer prices are expected to rebound in July, with both headline and core PPI seen rising 0.2% month-on-month after being flat in June. On an annual basis, headline inflation is forecast to accelerate to 2.5% and core to 2.9%, though tariff-driven pressures are likely to remain limited.

Trump Hints at Early Fed Chair Announcement, Criticizes Powell

President Trump signaled he may reveal the next Federal Reserve chair sooner than expected, saying the shortlist includes three or four strong contenders. He reiterated criticism of current chair Jerome Powell for keeping rates unchanged, though Powell is expected to serve until May. Treasury Secretary Scott Bessent noted the candidate pool could include up to 11 names.

Bessent Urges Aggressive Fed Cuts, Criticizes BOJ on Inflation

Treasury Secretary Scott Bessent called for U.S. short-term rates to be 1.5–1.75 percentage points lower, advocating a 50 bps cut in September as the start of multiple reductions. He also criticized the Bank of Japan for being “behind the curve” on inflation, saying it needs to hike rates to address rising prices.

Dollar Commentary:  The dollar index slid to a two-week low near 97.6 as expectations for Fed rate cuts strengthened after soft inflation data and labor market cooling. Markets widely anticipate a September cut, possibly 50 bps, while investors await PPI and jobless claims. The greenback saw its biggest losses versus the Aussie and yen.

Bonds Commentary:  The 10-year Treasury yield fell to 4.22%, extending declines as expectations for deeper Fed rate cuts grew following soft inflation data and labor market weakness. Markets now largely anticipate a September cut, with some betting on 50 bps, while attention turns to upcoming PPI and jobless claims for further clues.

Futures Update:  U.S. stock index futures hovered around flat levels after recent record highs, as investors awaited fresh economic data to gauge the health of the economy. Major indexes advanced in the previous session, with the S&P 500 and Nasdaq hitting new peaks and the Dow gaining over 1%, supported by expectations of a Fed rate cut in September amid easing inflation and a cooling labor market.

Following an initial rally on Tuesday, the stock retraced its gains throughout Wednesday’s trading session but managed to close slightly higher. The S&P 500 increased by 20.84 points, or 0.32%, finishing at 6,466.59. From a technical standpoint, the index found support at its key moving averages and steadily advanced, suggesting the possibility of a short-term upward trend. The 14-day RSI remains above the midpoint, signifying ongoing bullish momentum. Additional support is provided by other significant moving averages below the current level, with key support around 6,344 and resistance near 6,520.