• Dow Jones breached into a new all-time high of 40,346.22 on Monday.
• Fedspeak continues to dominate market attention as traders await cuts.
• Rate markets see 98% chance of September rate cut according to CME’s FedWatch.

The Dow Jones Industrial Average (DJIA) rallied into a new all-time peak on Monday, clipping into 40,346.22 before settling back into the day’s opening range near 40,200.00 as markets continue to weigh the odds of a future rate cut from the Federal Reserve (Fed). Fed Chairman Jerome Powell gave a nod of the head on Monday at recent progress on inflation data, helping to spark further hope for a September rate cut and prompting broad-market considerations of an even earlier cut in July.

According to the CME’s FedWatch Tool, rate markets are pricing in 98% odds of at least a quarter-point rate trim to the fed funds rate when the Federal Open Market Committee (FOMC) meets on September 18. Interest rate traders broadly see the Fed holding steady when the FOMC meets later this month on July 31. Still, a few particularly rate-cut-hungry market participants are pricing in around 7% odds of an early quarter-point rate trim.

After a steep deceleration in Consumer Price Index (CPI) inflation last week which sparked a fresh rally in rate cut hopes, markets are shrugging off a concerning uptick in Producer Price Index (PPI) wholesale inflation. The next bout of US economic data to watch will be Tuesday’s US Retail Sales, which markets expect to flatten to 0.0% MoM in June compared to the previous month’s 0.1%.