14/08/2025 Daily Reports
• Futures Flat After Strong Week – U.S. stock index futures paused Thursday after two consecutive record-breaking sessions for the S&P 500 and Nasdaq.
• Labor Market Weakness Fuels Rate-Cut Bets – Softer job data has boosted expectations for a 25 bps Fed rate cut in September, with similar cuts seen for October and December.
• Inflation Concerns Persist – Despite rate-cut hopes, inflation has stayed above the Fed’s target for 53 straight months and is trending higher.
• Fed Officials Divided – San Francisco Fed’s Mary Daly rejected the need for a 50 bps cut, while Treasury Secretary Scott Bessent said such a move is still possible.
• Key Data at 8:30 a.m. ET – Traders eye July Producer Price Index and weekly jobless claims; parts of the PPI feed into the Fed’s preferred inflation gauge (PCE).
• Valuations at Elevated Levels – S&P 500 now trades above long-term averages, supported by strong earnings and easing trade tensions.
• Corporate Movers – Cisco shares -1% despite AI-driven revenue forecast; Deere -7.7% and Tapestry -12% after weak profit guidance and tariff warnings.
• Fed Speech Ahead – St. Louis Fed’s Alberto Musalem to speak later today, potentially offering clues on policy direction.
• What’s Next?
Markets are pricing in a smooth ride for rate cuts, but the Fed’s mixed signals and stubborn inflation could still surprise traders. The next batch of inflation data might be the real game-changer for September’s decision.
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Trump’s plan to share chip profits with China is being criticised. The US Treasury Secretary has urged the Bank of Japan to raise interest rates. AI and robotics are changing the way houses are built in the UK.
• The Trump administration’s deal with Nvidia and AMD, which lets them sell AI chips to China in exchange for 15% of the revenue, is being looked at closely. Critics say this is an unconstitutional export tax. They are worried that the US government will start charging companies for their business activities in other countries. The deal, which China has reportedly made more difficult by discouraging the use of the chips, aims to get around strict export rules while making money for the US.
• Meanwhile, U.S. Treasury Secretary Scott Bessent has made his most explicit comments on Japan’s monetary policy. He told Bloomberg Television that the Bank of Japan (BOJ) is “behind the curve” on inflation and will likely need to raise interest rates. This is different from the opinion of BOJ Governor Kazuo Ueda, who has often said that it is wrong to be too slow to raise rates. The comments have reportedly led to a drop in Japanese government bonds and a rise in the value of the yen, as markets react to the pressure for a policy change.
• In the UK, the house-building industry is using more and more technology to deal with problems like a lack of workers and environmental targets. Giant robot arms, controlled by artificial intelligence, are being used to make building frames from sustainable timber. Some people think this could help the government build 300,000 new homes a year.
