Market Performance - US stocks closed at record highs, with the Dow Jones Industrial Average rising 1.4% and closing above 46,000 for the first time [2] - The S&P 500 increased by over 0.9%, while the Nasdaq Composite gained around 0.7%, marking its fourth consecutive record close above 22,000 [2] Economic Indicators - The Consumer Price Index (CPI) for August showed an annual inflation rate of 2.9%, up from 2.7% in July, with a month-over-month increase of 0.4% compared to July's 0.2% [3] - Jobless claims rose to 263,000, the highest level in nearly four years, indicating a weakening labor market [4] Federal Reserve Expectations - Markets are anticipating a greater than 90% chance of a quarter-point interest rate reduction at the Federal Reserve's upcoming meeting, with expectations for three rate cuts by the end of the year [5]

US stocks rose on Thursday as the latest reading on inflation showed consumer prices ticked up in August and jobless claims rose to their highest level in nearly four years, helping set expectations for the pace of interest rate cuts this year. The Dow Jones Industrial Average (^DJI) led stocks higher, rising over 1%, or around 500 points. The S&P 500 (^GSPC) rose over 0.6%, while the tech-heavy Nasdaq Composite (^IXIC) gained around 0.5%, on the heels of a muted but record-setting session on Wednesday. ...

Inflation Overview - Inflation rose 0.4% in August, with a year-over-year increase of 2.9%, remaining above the Federal Reserve's target rate [1] - Core prices, excluding volatile items like gasoline and food, increased by 0.3% month-over-month and 3.1% year-over-year, aligning with economists' expectations [2] Impact on Households - High inflation has imposed significant financial pressures on U.S. households, particularly affecting lower-income Americans who spend a larger portion of their income on necessities [3] Food Prices - Food prices rose 0.5% in August, with the food at home index increasing by 0.6% and food away from home by 0.3%. Year-over-year, the overall food index is up 3.2% [4] - Specific food categories showed varied price changes: egg prices remained flat, meat, poultry, and fish rose by 1.1%, dairy increased by 0.1%, and fruits and vegetables rose by 1.6% [5] Housing and Shelter Costs - Housing prices increased by 0.4% in August and are 3.6% higher than a year ago, driven primarily by the shelter index [8] - Energy costs rose by 0.7% month-over-month, with gasoline prices increasing by 1.9% but down 6.6% year-over-year [8] Transportation and Apparel Costs - Transportation costs increased by 1% in August and are 3.5% higher than last year, with auto maintenance costs up 2.4% month-over-month [9] - Apparel prices jumped by 2.2% in August, with footwear costs rising by 0.8% [9] Other Goods and Services - Tools, hardware, and outdoor equipment prices increased by 0.8% in August, up 3.9% year-over-year, while furniture and bedding costs rose by 0.3% and are up 4.7% from last year [10]

People shop at a supermarket on 18 July 2025 in Rockville, Maryland.Photograph: China News Service/Getty Images Inflation rose slightly in August as companies continued to push the cost of tariffs onto consumers. The newest update to the consumer price index (CPI), which measures a basket of goods and services, showed that prices increased 2.9% over the last year – the highest since January. Core CPI, which excludes energy and food costs, stayed stable at 3.1% after going up in July. Despite this slight u ...

Core Viewpoint - The central bank is reducing its benchmark interest rate to 40.5% from 43% due to a continued decline in inflation in the country [1] Group 1 - The benchmark rate will be lowered to 40.5% [1] - The previous benchmark rate was 43% [1] - The decision is influenced by the trend of decreasing inflation [1]

Economic Indicators - The US Producer Price Index (PPI) unexpectedly declined by 0.1% in August, marking the first drop in four months, with a year-on-year increase of 2.6%[11] - China's PPI fell by 2.9% year-on-year in August, while the Consumer Price Index (CPI) decreased by 0.4%[15] Market Performance - The Shanghai Composite Index rose by 0.13% to 3812.22 points, while the Shenzhen Component increased by 0.38%[1] - The Hang Seng Index closed up 1.01% at 26200.26 points, with the Hang Seng Technology Index gaining 1.27%[1] Trade Relations - Mexico plans to impose tariffs of up to 50% on Chinese automobiles, steel, and textiles, increasing from the current 20%[11] - The proposed tariffs aim to protect local jobs and industries, affecting approximately 1,400 products from countries without trade agreements with Mexico[11] Financial Market Developments - The total market turnover in Hong Kong reached 2882.086 billion HKD[1] - Tencent Holdings repurchased 86,600 shares for approximately 5.5 billion HKD, representing 0.586% of its total shares[12]

Core Viewpoint - The unexpected decline in the Producer Price Index (PPI) in the U.S. for the first time since April strengthens the rationale for the Federal Reserve to consider interest rate cuts [2][3] Group 1: PPI Data - The PPI fell by 0.1% month-over-month in August, marking the first decline in four months, while year-over-year it increased by 2.6% [2] - Excluding food and energy, the prices of goods rose by 0.3%, while service costs decreased by 0.2% [3][4] - The report indicates that despite higher costs from tariffs, companies refrained from significant price increases due to concerns about consumer behavior amid economic uncertainty [2][3] Group 2: Market Reaction - Following the PPI data release, U.S. stock index futures and Treasury prices rose, reflecting increased expectations for interest rate cuts by the Federal Reserve [3][5] - The two-year Treasury yield fell, and the dollar weakened, with the market pricing in three rate cuts by the end of 2025 [5] Group 3: Economic Implications - The decline in wholesale inflation may influence the Federal Reserve's decision-making regarding interest rates, especially in light of a slowing labor market [3] - The upcoming Consumer Price Index (CPI) data is anticipated to provide further insights into the impact of tariffs on household inflation [3]

Core Insights - A significant drop in U.S. producer prices has increased expectations for Federal Reserve rate cuts, with a focus on the upcoming Consumer Price Index report [1][3] - Economists predict the August Consumer Price Index will show a year-over-year inflation increase to 2.9%, the highest since January 2025 [1] - The core inflation rate is expected to remain steady at 3.1%, indicating persistent underlying price pressures above the Fed's target [2] Producer Price Index (PPI) Analysis - The August Producer Price Index (PPI) fell by 0.1% month-over-month, contrary to expectations of a 0.3% increase, with the annual rate decreasing to 2.6% from forecasts of 3.3% [3][4] - Core PPI also declined by 0.1% monthly, with the annual rate dropping from 3.4% to 2.8% [3] Market Expectations - Market sentiment is leaning towards a 25 basis-point rate cut by the Federal Open Market Committee (FOMC) next week, with a 89.8% probability assigned to this outcome [4] - There is speculation that a more substantial 50 basis-point cut could be more effective, although this is not currently priced in [4] Consumer Price Index (CPI) Forecasts - Goldman Sachs forecasts a core inflation increase of 0.36% for August, slightly above the consensus of 0.3%, leading to a year-over-year core rate of 3.13% [5] - Used car prices are expected to rise by 1.2%, while new car prices may increase by 0.2% due to reduced dealer incentives [5] - Airfares are projected to surge by 3%, influenced by seasonal factors and increased travel activity [6] - Broad inflationary pressures are noted in categories such as household goods, apparel, and electronics due to tariffs [6]

Core Viewpoint - The article discusses the potential candidacy of Federal Reserve Governor Christopher Waller for the position of Fed Chair, highlighting his recent warnings about the labor market and his evolving relationship with the Trump administration [2][3][4]. Group 1: Waller's Economic Insights - Waller warned in July that private sector hiring was "approaching stall speed," indicating a potential downturn in the labor market, despite a stable unemployment rate of 4.1% at that time [2]. - His predictions were validated by subsequent weak employment reports in July and August, reinforcing his credibility as an economist [2]. - Waller's ability to articulate a coherent framework for interest rate cuts has enhanced his reputation on Wall Street, distinguishing him from other candidates who may lack such qualities [4]. Group 2: Political Dynamics - Waller's chances for the Fed Chair position appear limited due to his lack of visibility within Trump's inner circle and the political advisors associated with the "Make America Great Again" (MAGA) movement [3]. - Treasury Secretary Mnuchin has begun interviewing candidates for the Fed Chair position, with Waller being one of the three strong contenders mentioned by Trump, alongside Kevin Hassett and Kevin Warsh [2][3]. - The political climate surrounding the Federal Reserve has become contentious, with Trump expressing dissatisfaction with the institution's traditional independence and targeting Fed officials he disagrees with [3]. Group 3: Waller's Background and Qualifications - Waller's unique background, having spent much of his career in academia before joining the St. Louis Fed, allows him to communicate effectively with diverse audiences [5]. - His experience includes navigating complex economic discussions, which he believes is essential for formulating monetary policy [5][6]. - Waller's previous challenges to economic orthodoxy, particularly regarding interest rate hikes, have drawn both criticism and validation from the economic community [6]. Group 4: Current Economic Context - As of July, most Fed officials were cautious due to inflation remaining above the 2% target for four consecutive years, influenced by tariffs imposed by Trump [6]. - Waller argues that the Fed should focus on preventing labor market deterioration and consider interest rate cuts despite temporary price effects from tariffs [6][7]. - His recent vocal opposition to prevailing economic policies may be seen as a strategic move to position himself favorably for the Fed Chair role [7].

Market Overview - US stocks reached new record highs, with the Dow Jones Industrial Average closing above 45,725, the S&P 500 above 6,512, and the Nasdaq Composite marking its second consecutive closing high this week [1] Labor Market Data - The Bureau of Labor Statistics reported that the US economy likely added 911,000 fewer jobs than previously estimated for the 12-month period ending March 2025, a larger revision than the expected 680,000 [2] Federal Reserve Expectations - The labor market data has heightened discussions on how the Federal Reserve will respond, with traders anticipating an interest-rate cut in the upcoming meeting. The focus has shifted to the potential magnitude of the cut and its implications for the stock market [3] Inflation Reports - Key inflation data, including the producer price index (PPI) and consumer price index (CPI), are set to be released, which will provide insights into whether rising prices could hinder significant interest-rate cuts [4] Corporate Highlights - Apple's annual fall event showcased new products, including the iPhone 17 and new AirPods, but its stock fell approximately 1.5% [5] - Tourmaline Bio and Nebius shares surged over 50% following deal announcements with Novartis and Microsoft, respectively [5] - Oracle and GameStop are scheduled to report earnings after market close [5]