The S&P 500 Index ($SPX) (SPY) today is up +0.22%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.44%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.17%. September E-mini S&P futures (ESU25) are up +0.30%, and September E-mini Nasdaq futures (NQU25) are up +0.20%.
Stock indexes are moving higher today, with the S&P 500, the Dow Jones Industrials, and the Nasdaq 100 all posting new all-time highs. Stocks are supported after today’s as-expected Aug CPI report and an unexpected surge in weekly jobless claims to a 3.75-year high knocked bond yields lower and cemented expectations for Fed rate cuts. The 10-year T-note yield fell to a 5-month low of 3.99%.
US weekly initial unemployment claims unexpectedly rose by +27,000 to a 3.75-year high of 263,000, showing a weaker labor market than expectations of a decline to 235,000.
US Aug CPI increased to +2.9% y/y from +2.7% y/y in July, right on expectations. Aug CPI ex-food and energy rose +3.1% y/y, unchanged from July and right on expectations.
Market focus this week will be on any trade or tariff news. On Friday, the University of Michigan’s Sep US consumer sentiment index is expected to slip -0.2 to 58.0.
The markets are now pricing in a 100% chance of a -25 bp rate cut and a 12% chance of a -50 bp rate cut at the upcoming FOMC meeting on Sep 16-17. After the fully expected -25 bp rate cut at the Sep 16-17 meeting, the markets are discounting a 100% chance of a second -25 bp rate cut at the Oct 28-29 meeting. The markets are now pricing in an overall -73 bp rate cut in the federal funds rate by year-end to 3.60% from the current 4.33% rate.
Overseas stock markets today are higher. The Euro Stoxx 50 is up +0.37%. China’s Shanghai Composite rose to a 1-week high and closed up +1.65%. Japan’s Nikkei Stock 225 rallied to a new all-time high and closed up +1.22%.
Interest Rates
December 10-year T-notes (ZNZ5) today are up by +4 ticks. The 10-year T-note yield is down by -1.9 bp to 4.026%. T-notes today climbed to a 5-month high, and the 10-year…
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