Daily News Analysis By Ultima Markets

[Ultima markets]

Optimism about rate cuts boosted global stocks, with the market focused on US inflation data.​

Global stock markets rallied on Monday, fueled by widespread expectations that the Federal Reserve (Fed) will restart its easing cycle in September. Japan's Nikkei 225 and the US Nasdaq both hit new highs. Further fueling the gains, the market is pricing in three interest rate cuts by 2025, according to the CME FedWatch tool. However, analysts at Ultima Markets caution that the market could quickly reprice after the first rate cut, shifting focus to the pace and depth of the easing cycle.


Chart: CME FedWatch Rate Cut Probability | Source: CME Group

Bond Markets, the US Dollar, and the Challenge of Inflation​

Despite the Fed's easing policy outlook, the bond market continues to show concerns about fiscal issues. The divergence of U.S. Treasury yields from other major markets has provided some support to the U.S. dollar. Currently, 98.50 and 97.50 , and its recent movement suggests a possible downside breakout.

Market attention now turns to this week's US inflation report, which will be the last major test before the Federal Open Market Committee (FOMC) meeting on September 16-17. A lower-than-expected Consumer Price Index (CPI) figure would reinforce market expectations for a deeper easing cycle. Conversely, if inflation remains stubbornly subdued, the Fed may need to act more cautiously.


Chart: S&P 500 daily chart | Source: Ultima Markets MT5

S&P 500 Technical Analysis​

The S&P 500's uptrend remains intact, but a rising wedge pattern has formed, which typically indicates that upward momentum is waning. This suggests that market sentiment may turn more cautious ahead of the inflation data release.

---

Risk Warning : Trading leveraged derivatives involves a high level of risk and may result in capital loss.

Disclaimer : All commentary, news, research, analysis, prices, and other information contained herein is for general informational purposes only and is intended to assist readers in understanding market conditions. It does not constitute investment advice. Ultima Markets has taken reasonable steps to ensure the accuracy of this information, but cannot guarantee its absolute accuracy. Content is subject to change without notice. Ultima Markets assumes no liability for any loss or damage (including, without limitation, loss of profit) arising directly or indirectly from the use of or reliance on such information.

 

[Ultima markets]

Expectations of Fed policy rise, with markets focusing on US inflation data​

Global stock markets traded this week amidst a cautiously optimistic atmosphere, as investors awaited the upcoming release of the US Producer Price Index (PPI) and Consumer Price Index (CPI) . These two key data sets will set the market tone ahead of next week's Federal Reserve policy meeting. Currently, the market has fully priced in a 25 basis point interest rate cut at the Federal Open Market Committee (FOMC) meeting on September 16-17, with expectations for three more rate cuts through 2025.

Federal Reserve officials have also recently reinforced their dovish stance. Governor Christopher Waller reiterated his support for a September rate cut and indicated that accommodative policy could continue for the next three to six months. Furthermore, Fed Governor Lisa Cook will participate in next week's FOMC vote, further strengthening the possibility of a policy shift.

Market Trends and Future Outlook​

• Stock market: Driven by expectations of interest rate cuts, the three major U.S. stock indexes continued to hit new highs, and major European and Asian stock indexes also rose simultaneously.
• Bond market: Despite a softening policy outlook, U.S. long-term Treasury yields remain higher than other major markets, reflecting concerns about fiscal issues.
• USD: Supported by risk aversion and yield differentials, the USD is range-bound, awaiting inflation data as a clear trigger. If inflation data is soft, the USD may weaken faster.

US Dollar Index (USDX), 4-hour chart | Source: Ultima Market MT5

Market focus has shifted from whether to cut interest rates to the pace of those cuts. The upcoming PPI and CPI data will be a key test in determining the path of future easing.

---

Risk Warning : Trading leveraged derivatives involves a high level of risk and may result in capital loss.

Disclaimer : All commentary, news, research, analysis, prices, and other information contained herein is for general informational purposes only and is intended to assist readers in understanding market conditions. It does not constitute investment advice. Ultima Markets has taken reasonable steps to ensure the accuracy of this information, but cannot guarantee its absolute accuracy. Content is subject to change without notice. Ultima Markets assumes no liability for any loss or damage (including, without limitation, loss of profit) arising directly or indirectly from the use of or reliance on such information.

 

[Ultima markets]

US PPI weakens, market expectations of interest rate cuts rise​

The unexpectedly weaker Producer Price Index (PPI) data released by the United States reinforced market expectations that the Federal Reserve (Fed) will begin a rate cut cycle next week. This news boosted global stock markets, including Japan's Nikkei 225 and Hong Kong's Hang Seng Index, which both hit new highs. All three major US indices also closed higher.

Inflation cooling and CPI data become the focus​

The US Producer Price Index unexpectedly fell by 0.1% month-over-month in August , below market expectations for a 0.3% increase . This data suggests that business cost pressures are easing, boosting market confidence in moderating consumer inflation. According to the CME FedWatch tool, market expectations for a 25 basis point rate cut by the Federal Reserve at its September meeting are now nearing 90% .

Next, market attention will be focused on the upcoming Consumer Price Index (CPI) data for August. If the data shows a further cooling of inflation, it could trigger market expectations of a deeper easing cycle; conversely, if the data overheats, it could prompt the Federal Reserve to slow its easing pace.

Federal Reserve Policy and Market Response​

Recent comments from Federal Reserve officials have been largely dovish, signaling a gradual easing cycle over the next three to six months. The participation of Fed Governor Lisa Cook, in particular, has further increased the likelihood of an interest rate cut. With the September rate cut largely priced in by the market, the key question now lies in the pace of these cuts. CPI data will directly influence market judgment on whether subsequent rate cuts will be long-term or rapid.

• Stock market : Driven by expectations of interest rate cuts, Wall Street's three major indexes continued to rise, with the Nasdaq and S&P 500 hovering around historical highs.
• Bond market : The yield on the 10-year U.S. Treasury bond fell to a four-month low of 4.02% , reflecting the market's confidence in future interest rate cuts.
• US Dollar and Gold : The US dollar briefly weakened after the PPI release before recovering, remaining in the 97.50-98.50 range. Spot gold, on the other hand, continued to hover above its historic high of $3,600 due to falling yields and safe-haven demand .

S&P 500 Technical Analysis Image Source: Ultima Market MT5

The S&P 500 continues to hit record highs, reflecting market optimism about the prospect of Federal Reserve rate cuts. While the overall technical uptrend remains solid, the formation of a rising wedge pattern suggests that upward momentum may be weakening, prompting investors to exercise caution.

Ultima Markets analysts warn that while the index may continue to rise in the short term, the risk of a short-term correction is increasing after next week's Federal Reserve meeting. Historical experience shows that after the first interest rate cut, the US stock market often experiences a correction due to investors taking profits.

---

Risk Warning : Trading leveraged derivatives involves a high level of risk and may result in capital loss.

Disclaimer : All content provided herein, including commentary, news, research, and analysis, is for general market information purposes only and does not constitute investment advice. While every effort has been made to provide accurate and current information, its accuracy cannot be guaranteed and is subject to change. Ultima Markets assumes no liability for any losses arising from the use or reliance on any information contained herein.

 

[Ultima markets]

US CPI strengthens expectations of rate cuts, while the European Central Bank remains cautious​

Thursday's US Consumer Price Index (CPI) data and the latest European Central Bank (ECB) decision delivered mixed signals to global markets, prompting investors to reassess the policy direction of major central banks. US inflation data was broadly in line with market expectations, and combined with recent soft labor market data, reinforced expectations that the Federal Reserve (Fed) will initiate an easing cycle in September. Meanwhile, the ECB maintained interest rates unchanged, emphasizing its cautious, "meet-by-meeting, data-dependent" approach rather than committing to a pre-set path.

US CPI data and interest rate cut outlook​

August's US CPI data showed a slight pickup in inflation, but it remained in line with market expectations. The core CPI annual growth rate remained at 3.1% . While inflation remains above the Federal Reserve's 2% target, the data has given the market confidence in the prospect of an interest rate cut later this year. Some analysts even believe the Fed may accept inflation stabilizing around 3% as the "new normal" in the post-pandemic era.

Divergence in monetary policy between Europe and the United States​

The ECB's latest decision stands in stark contrast to the Federal Reserve's projected path. The ECB believes the Eurozone economy is resilient and expects inflation to gradually return to target. However, the bank refused to commit to a timeline for future rate cuts, which the market interpreted as a cautious stance and tempered expectations for aggressive easing.

This policy divergence is expected to be a key driver of the euro, dollar and bond market trends in the coming months.

EURUSD Technical Analysis​

Image Source: Ultima Market MT5

The Euro/US Dollar (EURUSD) exchange rate has been range-bound recently. While diverging monetary policies between Europe and the US may provide support for the Euro, technically, the pair is currently facing key resistance at 1.1740–1.1800 . A breakout above this range could open up further upside; failing to do so, the pair is expected to continue its consolidation pattern.

---

Risk Warning : Trading leveraged derivatives involves a high level of risk and may result in capital loss.

Disclaimer : The commentary, news, research, analysis, prices, and other information contained herein are for informational purposes only and are intended to assist readers in understanding market conditions. They do not constitute investment advice. Ultima Markets has taken reasonable steps to ensure the accuracy of this information, but its accuracy cannot be guaranteed and is subject to change without notice. Ultima Markets assumes no liability for any loss or damage (including, without limitation, lost profit) arising directly or indirectly from the use of or reliance on such information.