🇺🇸 NEW: Odds of a Fed rate cut in September have dropped to 75.3%, with Powell set to speak tomorrow. https://t.co/gfVQkSyCPP ...

Hello and welcome to Morning Brief Market Sunrise. I'm Ramzan Carmali live from Yahoo Finance Studios in London. It's Thursday, 21st August. Coming up on the show, there are signs that the tech selloff is easing after days of big losses for some of the nation's biggest stocks. Investor focus now shifts to Jackson Hole. They'll be looking for any clues of what the interest rate path will look like. And in the last few moments, Walmart has just released its latest earnings report. I'll bring you the details. ...

💥BREAKING:The probability of a FED rate cut in September drops to 75%.All eyes on Powell's speech tomorrow. https://t.co/K5EMYvuAed ...

Monetary Policy - Indonesian central bank's surprise interest-rate cut is expected to boost the domestic economy and local assets [1]

Inflation & Interest Rates - South African inflation rose to a 10-month high in July [1] - The increased inflation reduces the likelihood of an interest-rate cut at the next policy meeting [1]

Indonesia’s central bank will likely keep its key interest rate unchanged after President Prabowo Subianto unveiled a 2026 budget that ramps up spending across the economy https://t.co/psRhjLzj3r ...

Monetary Policy - Uruguay's central bank lowered the key interest rate by 0.25 percentage point [1] Inflation - Inflation was near its target for two months [1]

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Housing Market & Interest Rates - Lowering the Fed rate might help consumers buy homes by injecting liquidity into the market, but other factors complicate the situation [1] - Mortgage rates are based on the 10-year yield, not the Fed funds rate; rate cuts don't automatically translate to cheaper mortgages [2][3] - Last year, Fed rate cuts spurred expectations for growth and inflation, pushing up the 10-year yield and hurting housing [3] - The belief that Fed cuts automatically lead to cheaper mortgages is not universally held; while it often happens, it didn't last year [4] Inflation & Monetary Policy - Higher and stickier inflation changes how the 10-year yield reacts to policy changes; bonds may not behave the same way to Fed cuts as in the past 20 years due to a different inflationary environment [5][6] - Equities are potentially a better inflation hedge than bonds, questioning bonds' role as a diversifier [6] - The labor market is showing signs of softening, which could lead to the Fed cutting rates and potentially pulling down long-term yields and inflation [8][9] Labor Market & AI Impact - 34% of CEOs surveyed by the Conference Board expect job cuts in the next 12 months, the first time those expecting cuts outnumbered those expecting to hire since COVID [8] - Companies are expected to accelerate job cuts to control costs [9] - Companies are investing in AI and training their staffs, but the timing and degree of AI's disinflationary impact are uncertain [10][11] - Companies are pressured to invest in AI, which requires upfront spending and may lead to headcount reductions to offset costs [11][12]

AI and Digital Infrastructure - The "Stargate" project, potentially valued at $500 billion, is considered a real development, involving numerous tech companies, though its full realization remains to be seen [1] - The US government views investment in digital infrastructure positively, aiming to maintain a leading position in this area, similar to having a strategic petroleum reserve, especially given the proliferation of AI [3] - The productivity improvements from AI are still in the early phases of discovery, with potential challenges for the entry-level workforce and the need for training and experience to validate AI outputs [5] - Digital infrastructure is attracting investor interest beyond chips and servers, extending to real estate and industrials providing power and cooling for data centers, all related to the AI theme [13] Geopolitics and Trade - The tariff strategy is reportedly compelling foreign-owned companies like TSMC and Foxconn to establish production in the US [6] - Nvidia views China as a significant total addressable market of $15 billion to $50 billion, emphasizing the importance of American technology maintaining a presence there [7] Monetary Policy and Economic Impact - The market anticipates a potential rate cut in September, influenced by inflation and unemployment figures [9] - The current Fed target rate of 45% feels restrictive, with a belief that a rate closer to 3% to 35% would be more appropriate in normal times [10][11] - Lower interest rates could aid cyclical companies in refinancing, benefiting industrials and real estate investment trusts [12]