By Mike Dolan
LONDON (Reuters) – What matters in U.S. and global markets today
By Mike Dolan, Editor-At-Large, Finance and Markets
U.S. July inflation data didn’t sound the all clear on tariffs but also didn’t send an unequivocal signal about the longer-term impacts either – and that seemed to be enough to goose Fed easing expectations, spur Wall St stocks to new records and sink volatility gauges.
Futures markets are now fully convinced another quarter point rate cut is coming next month and they’re almost halfway priced to three cuts by the end of the year. The S&P 500 and Nasdaq raced more than 1% higher on Tuesday, the VIX “fear index” sank to the lowest of the year and futures are up again ahead of today’s bell.
* Bond market volatility cratered to its lowest in more than 3-1/2 years, even as “core” inflation rose back above 3% for the first time in five months, as Treasury yields fell across the curve and the dollar index ebbed to its weakest in more than a fortnight. President Trump again lambasted Fed chair Jerome Powell for not cutting rates more quickly and threatened a “major lawsuit” against him, while also hitting out at Goldman Sachs boss David Solomon and its chief U.S. economist Jan Hatzius for the bank’s research on tariffs and forecasts.
* Treasury Secretary Scott Bessent talked about the Fed possibly cutting rates 50 basis points next month “to make up for the delay” and was hopeful the latest Trump appointee to the Fed board, White House advisor Stephen Miran, could be confirmed by the Fed’s September meeting. Meantime, the White House said the plan was to continue publishing monthly employment statistics even though Trump’s pick to head the embattled Bureau of Labor Statistics, E.J. Antoni, said this month that the BLS should suspend monthly payrolls releases until data problems were fixed – and rely instead on quarterly reports.
* Once again, tech stocks led the charge higher on Wall Street on Tuesday. Alphabet shares rose 1.2% as Perplexity made a $34.5 billion cash offer to buy the company’s Chrome browser and Intel climbed 5% after Trump met CEO Lip-Bu Tan and praised him, after claiming only last week that Tan was compromised due to Chinese links. European and Asia shares were higher, with Japan’s Nikkei hitting a record high, and eyes are now shifting to the U.S.-Russia summit in Alaska on Friday for clues about a possible Ukraine ceasefire.
Make sure to check out today’s column, where I consider whether the now government-blessed “stablecoin” explosion will juice or destabilise the economy.
Today’s Market Minute
* U.S. authorities have secretly placed location tracking devices in targeted shipments of advanced chips they see as being at high risk of illegal diversion to China, according to two people with direct knowledge.
* Perplexity AI made a $34.5 billion unsolicited all-cash offer for Alphabet’s Chrome browser on Tuesday, a bid far above its own valuation as the startup reaches for the browser’s billions of users pivotal to the AI search race.
* Investors have faced several counterintuitive swings this year, including the dollar’s plunge and record highs in bitcoin and U.S. stocks. Now, writes ROI columnist Jamie McGeever, we can add another to that list: the stellar outperformance of Latin American currencies against the dollar.
* Overcapacity has made its way into China’s domestic market, with price wars leading to collapsing profitability and accelerating deflation. The government has responded by launching a so-called “anti-involution” program. It’s had some early wins, but this could be a lengthy battle, claims Emmer Capital Partners Ltd founder Manishi Raychaudhuri.
* The pace of new capacity of U.S. solar, wind and battery systems has slowed nationally and in key states this year, weighing on sentiment surrounding clean energy. But, writes ROI columnist Gavin Maguire, climate trackers can take heart from the continued growth outside Texas and California.
Chart of the day
Wall Street “fear gauges” are plunging, with the VIX index measuring one-month implied volatility in the S&P500 plumbing its lowest levels of the year and the equivalent Treasury market MOVE index at its lowest since January 2022.
Today’s events to watch
* Richmond Federal Reserve President Thomas Barkin and Atlanta Fed President Raphael Bostic and Chicago Fed President Austan Goolsbee both speak
* U.S. corporate earnings: Cisco Systems
Want to receive the Morning Bid in your inbox every weekday morning? Sign up for the newsletter here. You can find ROI on the Reuters website, and you can follow us on LinkedIn and X.
Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
(By Mike Dolan; Editing by Frances Kerry)
Comments