In the upcoming economic update, a critical inflation gauge for July, specifically focusing on wholesale prices, is scheduled to be released at 8:30 a.m. ET. Alongside this report, weekly jobless claims data will also be unveiled. Economists predict that factory-gate prices likely experienced an uptick last month, indicating potential shifts in the economic landscape.
Following the recent consumer-price index report released on Tuesday, investor sentiment has noticeably shifted. There is a marked increase in bets that the Federal Reserve will lower interest rates in the near future. According to data from the CME Group, futures prices suggest that traders overwhelmingly anticipate a rate cut in September, reflecting confidence in a more accommodative monetary policy.
Mary Daly, the President of the San Francisco Fed, who has expressed a preference for lowering rates next month, voiced her concerns late Wednesday regarding the prospect of a substantial 0.5-percentage-point cut. She emphasized the importance of not signaling an urgency that does not align with her current assessment of the strength of the labor market. This statement came shortly after Treasury Secretary Scott Bessent highlighted the possibility of a significant rate cut.
In a similar vein, Chicago Fed President Austan Goolsbee expressed caution on the same day, drawing attention to a noticeable increase in certain service prices highlighted in the CPI report. Goolsbee reiterated the robustness of the labor market, further complicating the narrative surrounding potential rate adjustments.
In political news, former President Trump announced that he has narrowed down his choices to three or four candidates to succeed Fed Chair Jerome Powell. He indicated that he might make a nomination sooner rather than later, which could have implications for the future direction of monetary policy.
The stock market showed mixed reactions, with stock futures wavering throughout the day. Notably, the S&P 500 and the Nasdaq Composite reached record highs for the second consecutive session on Wednesday. Meanwhile, Treasury yields experienced a slight decline, with ten-year yields, a crucial indicator of borrowing costs, falling below 4.22%.
On the global stage, stock performance was mixed. European defense stocks saw an uptick in anticipation of the upcoming meeting between President Trump and Russian leader Vladimir Putin, scheduled for Friday. Conversely, benchmarks in Japan and China reported declines, reflecting varying economic sentiments across different regions.
