Market Report.
📊 The key day of the week is approaching, when we’ll get employment data that will allow us to better anticipate the Fed’s decision on interest rates. The market is nervous, which will make it more sensitive to this data. The CME Fedwatch tool indicates has a 96.6% chance of happening at its September meeting later this month.
💬 Several Federal Reserve officials have indicated that they believe further interest rate cuts are necessary, citing concerns about the labor market. Fed Governor Christopher Waller said he thinks the Fed should cut rates at the next meeting, stating “you want to get ahead of having the labor market go down because usually when the labor market turns bad, it turns bad fast.”
🤔 It is not common for a central banker to venture to make claims about something before the relevant data have been published. They are often, by default, ambiguous. The employment report hasn’t come out yet, but they’re already talking about a weakening labour market, interesting.
📉 It is also true that the latest JOLTS report showed a decline in job openings, which is adding to the officials’ labor market worries. Still, we need to wait til Friday to see the rest of the numbers.
💡 On the other hand, they no longer seem concerned about the possible inflation generated by Trump’s tariffs. Has something made them change their minds, or were they simply wrong these past few months? Some officials, like Waller and Musalem, see the impact of tariffs as temporary and expect inflation pressures to ease once the pass-through is complete.
🔍 Minneapolis Fed leader Neel Kashkari said the neutral fed funds rate suggests “interest rates have some room to come down gently over the next couple of years.”
💰 Meanwhile, gold futures have once again broken records, driven by the perception that a rate cut is inevitable. However, if that were the case, the Dollar Index would be falling in a similar response, and it isn’t. One of these two markets is wrong.
📈 Yesterday’s Japanese bond auction reassured the global fixed income market. Japanese bonds have recently skyrocketed, reaching alarming yields that would indicate risks of a possible collapse of Japan’s monstrous debt.
🔑 However, yesterday’s auction achieved a bid-to-cover ratio of 3.31, demonstrating that it is capable of attracting sufficient demand from investors for Japanese bonds, which prevents yields from continuing to rise out of control.
❓ The key question now is whether this signals the end of the danger for Japanese bonds or just a pause; in which case, this could be the black swan of the next financial crisis.
🇬🇧 Another country experiencing strong turbulence in its bonds is the UK. The UK’s Labour government has increased spending and will now have to find ways to fund it to convince investors that its deficit is under control.
💼 Speculation about potential tax increases in the upcoming UK budget is already causing anxiety among businesses and households, even before the budget date was set. Reports suggest Finance Minister Rachel Reeves is considering new taxes on home sales, changes to income tax and pensions relief, and possible new levies on banks and gambling. The UK economy grew faster than other G7 countries in the first half of 2025, but this was driven by higher public spending and manufacturers rushing to beat US tariffs. The public finances remain weak.
💸 Reeves will need to raise taxes by at least £20 billion, and possibly double that, to meet her own fiscal targets. This is causing concerns among businesses and consumers. Business groups like the CBI have called on the government not to repeat last year’s tax increases on employers, which they link to falling confidence, investment and activity.
😟 Household savings are high, suggesting consumer caution, while surveys show UK consumers are more anxious than during the pandemic due to worries about unemployment, inflation and potential tax rises.
📈 Wall Street rose on Wednesday, driven by a boost in tech shares after a favorable federal court decision in an Alphabet (Google’s parent company) antitrust case. The Nasdaq Composite gained 1.03% while the S&P 500 climbed 0.51%, though the Dow Jones Industrial Average lagged, falling 0.05%. Alphabet shares jumped 9.1% after the court ruled Google can keep its Chrome browser but must share search data and avoid exclusive search deals. The decision was seen as a positive for tech giants like Google and Apple, which can continue its lucrative arrangement of preloading Google Search on iPhones.
🎁 Apple CEO Tim Cook gifted President Trump a gold and glass plaque last month, which was seen as a move to manage the company’s relationship with the White House and navigate the threat of tariffs. Despite Cook’s efforts, the true costs of the tariffs may finally show up for Apple customers later this month as the company prepares to announce new iPhone models. Apple may raise prices on its new iPhone 17 series, with potential price increases of up to $50 per device.
⚔️ The endless war against everyone. Israel is once again heavily bombing Lebanon. The constant state of war keeps Netanyahu away from the courts that indicted him on corruption charges.
📜 The victims of the Epstein case suggest that if the government doesn’t release the list of clients, they themselves will publish their own list. The Epstein case was cited by Trump on several occasions and used against the Democratic Party; however, he now claims it is merely a Democratic Party invention. Trump told a reporter yesterday that the case is “a never-ending Democratic Party hoax.”
🤷 Claiming that Epstein committed suicide and saying that it’s all a setup is contradictory. If it’s all a setup, the tycoon would never have committed suicide over it.
📊 Market View:
📈 Markets are attempting to recover after the declines at the start of this week. Mini S&P 500 futures have risen to 6,465 points, while Nasdaq 100 futures have increased to 23,476.50 points. The technology sector is showing greater sensitivity to the declines, as evidenced by the differentiation between the S&P 500 and the Nasdaq 100.
💵 The dollar index continues to fluctuate between 97.50 and 98.80, retreating in recent hours to 98.20. The EUR/USD pair is struggling to surpass 1.17 due to the dollar’s indecision and is currently trading at 1.1655. We expect that Friday’s employment data will break this sideways movement.
🛢️ Crude oil has fallen by more than 3.50% so far this week, with Brent crude dropping to $66.90 ahead of the OPEC+ meeting on 7 September, where an increase in production is expected despite Russia’s discontent.
💰 Gold has retreated from its new historical highs in future prices at $3,640, currently dropping to $3,598.
💻 Bitcoin surpassed $112,500 during yesterday’s session; however, it is now retreating and trading at $110,400.
