Markets are digesting July’s inflation print alongside fresh developments in trade and global growth.

The headline CPI stayed at 2.7% year-over-year, slightly below forecasts, while the core reading of 3.1% came in a touch hot.

That leaves the Fed balancing two narratives: moderating price pressures in the categories households watch most closely, and sticky inflation in areas more sensitive to tariffs and services demand.

On the global front, the White House extended its China tariff truce until November, temporarily easing one risk to supply chains.

But a newly imposed 25% duty on Indian goods, with the threat of doubling by month’s end, is already disrupting “China+1” strategies.

As companies scramble, the market’s focus remains on whether the Fed will lean more on cooling labor market data than on the modest inflation uptick when deciding September’s policy path.

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The Big Picture

IPO Market

Wall Street’s IPO Pipeline Swells as Crypto Firms Go Public in Record Numbers

U.S. capital markets are witnessing a resurgence in cryptocurrency-related public listings, marking a sharp turnaround from the deep freeze that followed the 2022 FTX collapse.

The sector’s rebound has been fueled by record global market capitalization in digital assets and growing investor appetite for regulated exposure to crypto.

Bullish’s $1.1 billion debut this week follows stablecoin issuer Circle’s high-profile listing earlier this year, which saw its market value soar within days.

The success of these offerings, coupled with the recent passage of the Genius Act establishing a stablecoin regulatory framework, is reshaping the fundraising landscape for blockchain-based companies.

Major players, including BitGo, Grayscale, and Gemini, are now pursuing listings, while analysts see potential for exchanges like Kraken to join the pipeline.

The influx of offerings underscores how crypto has moved from speculative fringe to an asset class increasingly integrated into Wall Street’s deal flow.

For U.S. markets, the wave of listings represents more than sector-specific momentum — it reflects a broader revival in IPO activity and the willingness of institutional capital to embrace emerging digital asset infrastructure.

This shift could deepen the financial system’s ties to cryptocurrency markets, amplifying both opportunities and risks.

Federal Reserve

U.S. Bond Yields Hit Multi-Month Lows as Rate Cut Expectations Build

U.S. short-term government bond yields have dropped to their lowest levels since early May, signaling growing market conviction that the Federal Reserve will ease interest rates next month.

The two-year Treasury yield, which typically responds quickly to shifts in monetary policy expectations, fell to 3.65% this week.

That marks a notable retreat from late July levels, accelerated by weaker-than-expected employment data for July.

The five-year yield mirrored the move, also reaching its lowest point since May. This decline underscores a broader shift in economic sentiment.

Investors are weighing signs of a cooling labor market against persistent but moderating inflation, with both trends seen as providing the Fed with more room to adjust its policy.

Lower yields can ripple through the economy, reducing borrowing costs for households, businesses, and local governments, which may spur investment and consumer spending.

At the macro level, the move reflects anticipation of a turning point in U.S. monetary policy after a prolonged period of higher interest rates.

How the Fed navigates this transition will impact credit markets, equity valuations, and the broader economic outlook as we head into the final quarter of the year.

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Federal Reserve

Rising Producer Costs Threaten to Push Consumer Prices Higher as Fed Weighs Next Move

U.S. producer prices rose sharply in July, marking the fastest annual increase in three years and signaling renewed inflationary pressures across the supply chain.

The latest Producer Price Index (PPI) data indicate higher costs for businesses, particularly in core categories that exclude volatile food and energy components.

The rebound in producer inflation comes at a critical juncture for the U.S. economy.

After months of easing price growth, this uptick raises questions about how durable recent progress toward the Federal Reserve’s inflation target will be.

Higher producer costs often filter down to consumers, suggesting potential upward pressure on retail prices in the months ahead.

For businesses, the increase reflects a mix of factors, from elevated import costs linked to global trade frictions to higher expenses in the service sector and lingering supply chain inefficiencies.

These pressures, combined with a still-tight labor market, could complicate the Fed’s path toward looser monetary policy.

While investors have been anticipating interest rate cuts, the persistence of underlying inflation adds a layer of uncertainty.

With the Fed’s annual Jackson Hole gathering approaching, the focus will be on whether policymakers view this rise in producer prices as a temporary spike or an early sign of a more stubborn inflation cycle.

Metrics to Watch

• Consumer Price Index Shows Mixed Signals: July CPI rose 2.7% year-over-year, unchanged from June and just under expectations.
  
  Core CPI, however, ticked up to 3.1%, reflecting services inflation and selective tariff pass-throughs.
  
  Investors are weighing whether these pressures will prove temporary or signal a slower path to the Fed’s 2% target.
  
  

• Labor Market Cooling in Focus: Downward revisions to May and June payrolls and soft July hiring have heightened attention on weekly jobless claims.
  
  Economists expect claims to edge higher, reinforcing the view that labor market weakness could outweigh inflation concerns in guiding Fed policy.
  
  

• Productivity and Unit Labor Costs Shift: Q2 productivity is projected to rebound sharply to 1.9% after a -1.5% reading in Q1, while unit labor costs are expected to slow to 1.3% from 6.6%.
  
  These figures will influence how the Fed interprets wage-driven inflation risks heading into the fall.
  
  

• Consumer Credit Trends: June’s credit report will show whether households are leaning more heavily on debt as savings rates decline.
  
  Elevated borrowing could support spending in the short term but add longer-term vulnerabilities to the consumer-driven economy.

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Market Movers

🪑 Fed’s September Decision Path Still Murky
July’s CPI didn’t deliver the kind of upside shock that would derail rate-cut expectations, but it also didn’t provide a clear green light for aggressive easing.

With unemployment drifting higher and inflation in key consumer categories stabilizing, the Fed may give more weight to labor market softness in September.

Still, a hotter core reading complicates the case for larger moves.

📈 Equities Hold Gains Despite Inflation Uncertainty
The S&P 500 and Nasdaq both set new records following the CPI release, underscoring the market’s preference for any data that keeps cuts in play.

However, gains remain concentrated in a few sectors, with breadth lagging. That dynamic could leave markets more sensitive to data misses as the summer rally ages.

🌏 India Tariff Shock Disrupts Supply Chain Strategies
The U.S.’s sudden 25% tariff on Indian imports, with the threat of doubling to 50%, has upended months of corporate planning to diversify away from China.

Electronics, apparel, and specialty manufacturing are among the sectors reassessing production footprints, with some firms now considering Pakistan, Turkey, or even a return to China despite prior exit plans.

🕒 China Tariff Truce Buys Time, But Not Certainty
By extending the pause on higher tariffs to November, the U.S. and China have opened a window for negotiation.

But with seasonal demand peaks approaching and tensions still high, the reprieve may simply push the risk of fresh trade shocks into the holiday season, when supply chain disruptions carry greater economic consequences.

Market Impacts

Equities: U.S. stock futures were steady Thursday after back-to-back record closes for the S&P 500 and Nasdaq, with investors digesting cooler July inflation data and looking ahead to the next batch of reports.

The S&P 500 and Nasdaq each posted modest gains on Wednesday, while the Dow climbed more than 460 points, buoyed by rate-cut hopes for the Fed’s September meeting. 

Attention now shifts to the July PPI and weekly jobless claims, which could further cement easing expectations.

In the background, crypto markets stayed hot, as bitcoin hit an all-time high above $123,600, while ether approached its 2021 record.

Gold miners also outperformed, with the VanEck Gold Miners ETF gaining over 40% relative to gold so far in 2025, fueled by stronger balance sheets and buyback potential.

Bonds: Treasury yields fell for a second session as softer July inflation data reinforced expectations for imminent Fed cuts.

The 10-year yield slipped nearly 6 basis points to 4.238%, while the 2-year fell to 3.681%. 

Futures markets are now pricing in near-certainty of a September cut, with some chatter about a potential 50-basis-point move if upcoming data remains tame.

Strategists expect yield curves to steepen on easier policy and ongoing fiscal support, though long-term yields could remain restrictive for housing-sensitive sectors.

Currencies: The dollar extended its pullback, with the dollar index hitting 97.81, the lowest since late July, as traders priced in a 98% chance of a September rate cut.

Political pressure on the Fed added to the weakness, with the White House openly pushing for faster and deeper easing. 

The euro climbed to $1.1705, sterling to $1.3572, and commodity-linked currencies like the Aussie and kiwi also gained.

In crypto, ether surged to $4,734, overtaking bitcoin as the most-traded asset on OKX over the past month.

Commodities: Gold rose 0.4% to $3,357.59 an ounce, supported by the weaker dollar and falling yields, as investors leaned into safe-haven positioning ahead of U.S.–Russia talks.

Traders see a break above $3,400 as more likely to come from geopolitical events than economic data in the near term. 

Oil prices slipped, with Brent settling at $65.63 and WTI at $62.65, after U.S. crude inventories unexpectedly rose by 3 million barrels.

Supply concerns were offset by caution ahead of Trump’s planned meeting with Putin, with sanctions risk adding a geopolitical premium to prices.

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Key Indicators to Watch

📅 Initial Jobless Claims – Thursday, Aug. 14
Claims are forecast to edge up to 229,000 from 226,000. A higher reading would support the view that the labor market is cooling after July’s weak payroll print.

📅 Producer Price Index – Thursday, Aug. 14
PPI is expected to rise 0.2% month-over-month in July, with core PPI up 0.3%. A surprise jump could challenge the Fed’s easing narrative.

📅 U.S. Retail Sales – Friday, Aug. 15
Economists see a 0.5% gain for July, with ex-autos up 0.3%. This report will test the resilience of consumer spending amid higher borrowing costs.

📅 Consumer Sentiment (Prelim) – Friday, Aug. 15
The University of Michigan’s August reading is projected to improve to 62.5 from 61.7. Rising sentiment could temper expectations for aggressive Fed cuts.

Everything Else

• Economists warn tariff-driven inflation is building despite White House pushback on price concerns.

• The Bank of England trims rates by 25 basis points to 4%, aiming to support growth as the U.K. economy cools.

• Three-quarters of Japanese companies support the U.S. trade deal, citing long-term business benefits.

• Goldman Sachs now expects three Fed cuts in 2025 and two more in 2026 to cushion economic headwinds.

• The U.S. budget deficit widened to $291B in July, despite a jump in tariff revenue, as spending growth outpaced gains.