Dow Jones climbed 450 points to set a fresh all-time peak above 40,200.00.
Markets are broadly shrugging off an acceleration of US PPI wholesale inflation.
US consumer sentiment surveys worsened, but 5-year inflation expectations eased.
The Dow Jones Industrial Average (DJIA) soared over 450 points on Friday as markets pile back into renewed hopes for rate cuts from the Federal Reserve (Fed) in September even as US Producer Price Index (PPI) wholesale inflation accelerated faster than expected in June. Markets have entirely buried the needle on rate cut forecasts, pricing in three rate cuts in 2024 and a 95% chance of a rate trim on September 18.
June’s US core PPI wholesale inflation accelerated to 3.0% YoY, entirely eclipsing the forecast 2.5%, and the previous period’s print also saw an upside revision to 2.6% from the initial 2.3%. Despite the sharp uptick in producer-level inflation, markets are instead refocusing on a decline in Consumer Price Inflation (CPI) inflation earlier in the week in order to lean firmly into rate cut hopes.
According to the CME’s FedWatch tool, rate market bets of at least a quarter-point rate trim at the Federal Open Market Committee’s (FOMC) September 18 rate call. Rate traders are also now pricing in at least three rate cuts in total for 2024, a step above the Fed’s own projected one or two rate cuts by December.
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