The DXY Index may consolidate following a two-day rebound near the top end of its three-week range (100.5 and 101.9). The US Treasury 2Y yield rose by 2.3 bps to 3.67% after four consecutive sessions of declines. Overnight, the Dow, S&P 500, and Nasdaq Composite indices each gained 1.2%, stabilizing after their worst weekly sell-off this year. The futures market believes that the Fed needs to act more forcefully with a 50 bps cut at next week’s FOMC meeting to counter US recession fears tied to a cooling labour market.
However, last Friday’s US jobs report was mixed, and tomorrow’s US CPI data should support a normal 25 bps cut instead. Consensus expects CPI and core inflation to repeat July’s 0.2% MoM rise in August, keeping year-on-year inflation above the 2% target. The New York Fed reported that 1-year and 5-year inflation expectations held steady in August at 3% and 2.8%, respectively, though 3-year expectations ticked up to 2.5% from 2.3% in July.
With no significant data releases today, markets will likely remain on the sidelines ahead of the second US Presidential debate between Vice President Kamala Harris and Republican candidate Donald Trump (September 11 at 9 am Singapore time). Polls indicate a tight race for the US Presidential elections on November 5. Harris has reinvigorated the Democratic campaign following President Joe Biden’s exit after a poor first debate. To maintain the momentum, Harris needs to win over undecided voters unfamiliar with her in the critical swing states to stay in the White House. The second debate will be more about Harris getting these voters to believe in her by defining her policies and character instead of convincing them of Trump’s poor credentials.
Quote of the day
”You have only one way to convince others, listen to them.”
George Washington
September 10 in history
In 2022, King Charles III was officially proclaimed Britain’s monarch.
Topic
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