Markets
What to know:
- The Fed, that ever so enigmatic maestro of financial theatre, is poised-nay, expected-to trim rates by a modest 25 basis points come September 17, despite inflation’s cheeky little upward nudge to 2.9% last August; because why not keep us all guessing?
- The markets, ever the optimists or perhaps just masochists, have already danced to this tune, thereby setting the stage for a delightful spectacle of short-term disappointment and jittery volatility. 🍿
- Meanwhile, the darlings of risk assets-Bitcoin, gold, and equities-sit primly, ready to blossom like Wilde’s own Dorian Gray portrait, promising long-term gains if the Fed plays nice and keeps the policy gentle.
Oh, dear investors, the countdown to the Federal Reserve’s monetary rendezvous on September 17 ticks ever closer. They whisper of a quarter-point rate cut, a move that might send shockwaves of hysteria today but whispers promises of riches tomorrow. How divine the drama of finance! 🎭
The economic canvas is as intricate as a Wildean epigram-delicate, balancing, and deliciously absurd.
Our trusty U.S. Bureau of Labor Statistics has perhaps amused itself by reporting that consumer prices climbed 0.4% in August, pushing the annual CPI upwards to a charming 2.9% from July’s 2.7%. Blame shelter, food, and gasoline, the villains of this inflationary tragicomedy. Core CPI also tiptoed upwards by 0.3%, maintaining its steady, teasing pace like an uninvited guest at a splendid soirée.
Producer prices joined the gossip, revealing a slip of 0.1% in August but still lingering 2.6% higher than last year. The core PPI paraded a 2.8% yearly surge-not quite the belle of the ball but certainly causing raised eyebrows. Together, these figures whisper the ever-persistent tale of inflation, stubborn as a Wildean character refusing to exit stage left despite slow growth.
The labor market, that fickle mistress, has softened her steps.
With just 22,000 new nonfarm payrolls in August, and job losses in the federal government and energy sectors counterbalancing meager healthcare gains, the unemployment rate plays coy at 4.3%, while the labor force participation remains stuck at a pedestrian 62.3%.A revision of June and July’s numbers shaves the growth a bit, confirming a cooling zeal. Yet, average hourly earnings march upwards by 3.7% year-over-year, keeping wage pressure alive and well (and well-dressed).
Bonds, those staid companions of the financial world, have adjusted their frowns and smiles accordingly. MarketWatch reveals the 2-year Treasury yield twinkling at 3.56%, while its 10-year cousin lounges at 4.07%, resulting in an elegantly inverted curve-because what’s finance without a little irony? Futures traders show a 93% tantrum-free expectation of a 25 basis points cut, per CME FedWatch.
Should the Fed confine its generosity to a mere 25 bps, investors might perform the classic “buy the rumor, sell the news” fandango, since the dancefloor is already crowded with anticipation.
Equities, ever so bold, are flirting with record highs.
The S&P 500 sashayed to a close of 6,584 on Friday, jumping 1.6% for the week in its most spirited performance since early August. Its one-month chart tells a tale of triumphant return from the shadows of late August’s pullback-a bullish waltz into Fed week.
The Nasdaq Composite, achieving the improbable feat of five straight record highs, waltzed to 22,141, buoyed by megacap tech stocks-those titans who never fail to steal the limelight. Meanwhile, the Dow, ever the gentleman, slipped below 46,000 yet managed to book a weekly advance, proving that even the most dignified can trip gracefully.
And let us not forget the glittering duo of crypto and commodities, who have joined this gala with aplomb.
Bitcoin, that elusive libertine, flirts at $115,234-below its August 14 peak near $124,000 but still showing the class that endears it to 2025’s portfolio enthusiasts; the entire crypto market cap struts at a formidable $4.14 trillion. 💎🙌
Gold, ever the aristocrat of assets, has surged to $3,643 per ounce, near its own towering highs. Its one-month chart depicts a steady ascent, as investors clutch at their treasures seeking refuge from the vagaries of real yields and inflation’s persistent sneers.
Historical precedent, that most reliable gossip, offers a swirl of cautious optimism.
The Kobeissi Letter, sourced to Carson Research and whispered about in a Saturday X thread, reveals a sparkling consistency: in 20 of 20 previous occasions since 1980 when the Fed sliced rates with the S&P 500 within 2% of record highs, the index retired higher a year later, boasting an average gain nearing 14%. Ah, the sweet cruelty of time’s patience!
The nearer future, alas, remains a jittery mistress-11 of 22 such episodes saw stocks tumble in the very month following a cut. Kobeissi, that sorcerer of charts, suggests a familiar choreography: a brief tempest followed by a golden encore, as rate relief fans bullish flames across equities, bitcoin, and gold.
Thus, amidst all this fiscal intrigue, traders watch the September 17 pronouncement with bated breath.
To cut rates as inflation pirouettes higher and stocks pirouette near records risks marring the Fed’s once stern credibility; yet, to abstain might provoke a cataclysm of market spooks, eager to haunt what was already presumed promised. Either way, the Fed’s soliloquy on growth, inflation, and policy shall determine the script for markets far beyond next week’s finale.
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2025-09-13 22:30