US and Australian markets inched higher as investors reassessed rate cut prospects after a heavy week of economic data.
The US market posted solid gains despite shaky economic data, reflecting a renewed “bad news is good news” dynamic. Midweek, investors piled into rate-cut bets after Treasury Secretary Scott Bessent urged the Federal Reserve to slash rates by 150bps and even consider a 50bps move in September.1 Those expectations were tempered when producer price inflation surged 0.9% MoM – the sharpest rise since November 2022.2 Still, markets rallied on confidence that the Fed’s rate-cut cycle, paused since December 2024, is set to resume.3 Attention now turns to Jackson Hole this weekend for clues on the Fed’s preferred policy path.
In Australia, equities climbed after the RBA delivered its expected rate cut. Unlike the US, local data was firmer, with unemployment falling to 4.2%, validating the central bank’s decision to pause easing in July before resuming cuts this month.4
Ethereum (EETH, IETH, QETH) ETFs were the top performers again for the week, with traders betting that “altcoin season” is underway. Historically, crypto markets have moved in cycles where Bitcoin rallies first, followed by a broad upswing in altcoins. Ethereum came within striking distance of its all-time high as investors positioned for the next leg of the bull cycle. 5
In the world of commodities:
- Gold (GOLD edged lower after hotter-than-expected producer inflation and retail sales curbed interest rate cut expectations.6 Gold tends to outperform in low-rate environments as it is a non-yielding asset.
- Crude oil (BCOM, OOO) markets may head lower on signs of progress toward ceasefire between Russia and Ukraine.7 President Trump recently met with Vladimir Putin in Alaska and has since urged the Russian leader to join a summit with Volodymyr Zelenskiy in a bid to broker an end to the conflict.
- Lithium carbonate (ACDC) prices in China surged to a 15-month high of 84,000 CNY per tonne as traders bet on further production curbs.8 The whitish metal is now up 42% from its June lows.
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