Bolivia Exit Polls Suggest Leftist Defeat, Centrist Rodrigo Paz Leads

Samantha Luan

Political

Economic

Cryptocurrency

Summary:

Early exit polls in Bolivia's presidential election on Sunday showed Centrist Senator Rodrigo Paz of the Christian Democratic Party leading, with the ruling Movement for Socialism party on track to suffer its worst electoral defeat in a generation.Paz had secured 31.3% of the vote, according to a poll published by Unitel TV, while the ruling Movement for Socialism party candidate Eduardo del Castillo had just 3.2%, with other leftist challengers trailing the opposition.

Conservative former president Jorge "Tuto" Quiroga, of the Alianza Libre coalition, was in second with 27.3%, said Unitel.If no presidential candidate wins more than 40% support with a 10 percentage point lead, the election will head to a runoff on October 19 between the top two candidates.

Official results are expected after 9 p.m. (0100 GMT).

Sunday's general election has been overshadowed by inflation at a four-decade high and the absence of former leftist president Evo Morales, who is barred from running.Voter turnout on Sunday was steady, authorities said. Despite earlier concerns that the electoral process in Bolivia could be obstructed by supporters of Morales, who had called on the public to boycott the race, international observers said the vote took place without major disruptions.

Head of the electoral mission of the Organization of American States (OAS) in Bolivia, Juan Fernando Cristo, said the elections proceeded "normally" in a post on X.Earlier on Sunday, several minor incidents took place at polling stations in the central region of Cochabamba, Morales' political stronghold.

Polls suggest 20% of Bolivians are undecided ahead of August election

With a crowded field and no dominant MAS party candidate, the election marks a "crossroads moment" for Bolivia, said Southern Andes analyst Glaeldys Gonzalez Calanche of the International Crisis Group.Bolivia's fragile economy has been top-of-mind for voters. Price rises have surged past other Latin American countries this year, and fuel and dollars have run scarce.Annual inflation doubled to 23% in June, up from 12% in January, with some Bolivians turning to cryptocurrencies as a hedge.

Bolivia's inflation is soaring past others in the region who were far more affected in recent years, including during the Covid-19 pandemic.Many Bolivians, especially those who work in the informal economy, were now struggling to make ends meet, said economist Roger Lopez."Prices of the basic food basket are going up fast," said Lopez. "Suddenly the math doesn't add up anymore."

Exit polls indicated they chose to punish MAS on Sunday, creating a window of opportunity for centrists, the right, or a leftist faction led by Senate President Andronico Rodriguez."Every year the situation has got worse under this government," said Silvia Morales, 30, from La Paz, who works in retail. A former MAS voter, she said this time she would cast her vote for the center-right.Carlos Blanco Casas, 60, a teacher in La Paz, said he intended to vote for change. "This election feels hopeful. We need a change of direction," he said.

Quiroga has promised "radical change" to reverse what he calls "20 lost years" under MAS rule. He supports deep public spending cuts and a shift away from alliances with Venezuela, Cuba and Nicaragua. Quiroga was president for a year in 2001-2002 after the then-leader resigned.Paz meanwhile plans to decentralize government by introducing a "50-50 economic model" in which the central government would manage only half of public funds. The remainder would be designated to regional governments.

Silvia Morales, 30, a former MAS voter from La Paz, said she had cast her ballot for Paz on Sunday."He's a new face with experience," she said, "I think we should make space for new opportunites."On the left, the vote is split between the official MAS party candidate Eduardo del Castillo, who is backed by outgoing President Luis Arce, and Senate President Andronico Rodriguez, who has distanced himself from the party and is running on his own ticket.

Morales, 69, has called for a boycott of the election, but analysts said his influence is waning."There is widespread support for these elections," said Calanche. "Most Bolivians see them as key to leading the country towards economic recovery."

Source: Reuters

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Cryptocurrency

Stocks

Bitcoin and Nasdaq Hit Record Highs One Day Apart: What Traders Should Watch

Daily Bitcoin (BTCUSD)

Bitcoin and the Nasdaq 100 both hit new records last week, with the Nasdaq peaking at 24068.50 and Bitcoin reaching $124,533.00 just one day later. The synchronized highs reinforce Bitcoin’s role as a leveraged extension of the tech trade. But with Bitcoin now breaking below its 50-day average while the Nasdaq consolidates near highs, traders should take note of the divergence.

Correlation Confirmed, But Bitcoin Slips Below Support

Daily E-mini Nasdaq 100 Index Futures

Since June, the Nasdaq has climbed from 21566.75 to its recent record at 24068.50, a gain of nearly 12%. Bitcoin surged even more, rising from $98,225.01 in late June to $124,533.00 in mid-August, a 26% rally. This mirrors the typical pattern: Bitcoin amplifies Nasdaq moves by 2–3 times.

The difference now is direction. Bitcoin has closed at $114,732.68, dropping under its 50-day SMA at $115,713.70, while the Nasdaq remains steady above its 50-day SMA at 22959.90. The last time Bitcoin dipped below its 50-day average in early August, it found support at $111,903.68 before bouncing. That level is once again in play.

Upside Scenario: Reclaiming Momentum

If the Nasdaq continues higher toward 25000, Bitcoin could rebound and retest the $120,000–$124,000 zone. In a bullish continuation, Bitcoin typically outpaces the Nasdaq’s percentage move, suggesting potential gains of 10–15% from current levels. For this scenario to hold, Bitcoin must quickly reclaim the 50-day moving average and maintain its familiar one-day lag behind Nasdaq’s moves.

Downside Scenario: Bitcoin as the Leading Signal

The greater risk is that Bitcoin’s weakness signals trouble ahead for equities. A 5% Nasdaq pullback to around 22500 could push Bitcoin back toward the $105,119.70–$111,903.68 range. A decisive break below those supports would open the door to a deeper decline, with the 200-day SMA at $100,342.52 as the next target.

Market Outlook: Cautious Bias

The synchronized record highs confirm Bitcoin’s identity as a high-beta tech instrument, but the latest breakdown below support tilts the short-term bias toward caution.

Bullish case: Bitcoin reclaims $116,000+ while Nasdaq holds above 23500.

Bearish case: Bitcoin sustains closes below $115,000 while Nasdaq trades flat, confirming crypto is leading the correction.

For traders, Bitcoin remains both an amplifier and an early warning system. Its latest weakness suggests equity investors should stay alert: when Bitcoin breaks first, tech stocks often follow.

Source: fxempire

Risk Warnings and Disclaimers

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Michelle

Political

Russia-Ukraine Conflict

President Volodymyr Zelenskiy accused Russia of unleashing "cynical" attacks on Ukrainian civilians that he said were designed to undermine his talks with U.S. President Donald Trump in Washington later on Monday.

Officials in Ukraine said a drone attack on a residential complex in the northern city of Kharkiv killed at least seven people, including a 1-year-old girl. Strikes also hit the southeastern city of Zaporizhzhia, killing three people, they said.

"This was a demonstrative and cynical Russian strike," Zelenskiy wrote on X.

"The Russian war machine continues to destroy lives despite everything," he added. "Putin will commit demonstrative killings to maintain pressure on Ukraine and Europe, as well as to humiliate diplomatic efforts."

After rolling out the red carpet for Russian President Vladimir Putin at a summit in Alaska on Friday, Trump is leaning on Ukraine to accept a peace deal to end Europe's deadliest war in 80 years.

The war has killed or wounded more than a million people from both sides, including thousands of mostly Ukrainian civilians, according to analysts. Kyiv and its allies worry that Trump could force an agreement more favourable to Moscow.

The Russian defence ministry's daily report said its forces had attacked Ukrainian units in the Kharkiv region but did not refer to any strike on the city of Kharkiv. Russia says it does not deliberately target civilians.

Trump will meet Zelenskiy first and then the leaders of Britain, Germany, France, Italy, Finland, the European Union and NATO, the White House said. The European leaders are flying to Washington to show solidarity with Ukraine and to press for strong security guarantees in any post-war settlement.

Trump's team stressed on Sunday that there had to be compromises on both sides. But Trump put the burden on Zelenskiy to end the war that Russia began with its full-scale invasion in February 2022.

Ahead of the meeting, he said in a social media post Ukraine should give up hopes of getting back Crimea, annexed by Russia in 2014 during Barack Obama's presidency, or of joining the NATO military alliance.

That suggested he would press Zelenskiy hard.

Zelenskiy "can end the war with Russia almost immediately, if he wants to, or he can continue to fight," Trump said on Truth Social.

Trump will meet Zelenskiy at 1:15 p.m. EDT (1715 GMT) in the Oval Office and then with all the European leaders in the White House's East Room at 3 p.m. EDT (1900 GMT), the White House said.

Ukrainian President Volodymyr Zelenskiy walks to meet British Prime Minister Keir Starmer at Downing Street, in London, Britain, August 14, 2025. REUTERS/Isabel Infantes/File Photo Purchase Licensing Rights, opens new tab

The Ukrainian president, seeking to avoid a repeat of the bad-tempered Oval Office meeting he had with Trump in February, said after arriving in Washington late on Sunday he was grateful to the president for the invitation.

SECURITY GUARANTEES

Ukraine and its allies have taken heart from some developments, including Trump's apparent willingness to provide post-settlement security guarantees for Ukraine. A German government spokesperson said on Monday that European leaders would seek more details on that in the talks in Washington.

Zelenskiy has already all but rejected the outline of Putin's proposals from the Alaska meeting, including for Ukraine to give up the rest of its eastern Donetsk region, of which it currently controls a quarter.

Zelenskiy is also seeking an immediate ceasefire to conduct deeper peace talks. Trump previously backed that but reversed course after the summit with Putin and indicated support for Russia's favoured approach of negotiating a comprehensive deal while fighting rumbles on.

Russia launched missiles and drones in overnight attacks that included strikes on Kharkiv.

"They hit an ordinary apartment block, many flats, many families were living here, small children, children's playground, residential compound, there are no offices here or anything else, we lived here peacefully in our homes," said Olena Yakusheva, a local resident.

Firefighters battled a blaze in the building and rescue workers dug in the rubble.

On the battlefield, Russia has been slowly grinding forward, pressing home its advantages in men and firepower. Putin says he is ready to continue fighting until his military objectives are achieved.

The outline of Putin's proposals, reported by Reuters earlier, appears impossible for Zelenskiy to accept. Ukrainian forces are deeply dug into the Donetsk region, whose towns and hills serve as a crucial defensive zone to stymie Russian attacks.

"D-Day at the White House" said Britain's Daily Mail, while the Daily Mirror said "Europe takes a stand" in its front page headline. Germany's Die Welt called it the "moment of truth" for the U.S. president.

Meanwhile, Russian crude oil flows to Hungary and Slovakia via the Druzhba pipeline were halted on Monday. Hungary blamed Ukraine for an attack on a transformer station. Ukrainian Foreign Minister Andrii Sybiha neither confirmed nor denied the account of the attack, but wrote on X that Hungary "can now send complaints" to Moscow, not Kyiv.

Unlike most other EU countries, Hungary has kept up its reliance on Russian energy since Moscow's invasion of Ukraine. It imports most of its crude via the Druzhba pipeline, which runs through Belarus and Ukraine to Hungary and also Slovakia.

Source: Reuters

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Adam

Economic

stock futures were muted ahead of a high-stakes meeting between President Donald Trump and Ukrainian President Volodymyr Zelensky in Washington. The outlook for the Federal Reserve’s interest rate trajectory remains in focus as well, with minutes from the central bank’s July meeting and Chair Jerome Powell’s speech at a much-anticipated event set to come later this week. Elsewhere, Palo Alto Networks is due to report following the closing bell on Wall Street.

Futures muted

U.S. stock futures were subdued on Monday, as investors looked ahead to a week of potentially key developments in Federal Reserve interest rate policy and gauged the outlook for an upcoming U.S.-Ukraine meeting.

By 03:23 ET (07:23 GMT), the Dow futures contract had slipped by 97 points, or 0.2%, S&P 500 futures had fallen by 7 points, or 0.1%, and Nasdaq 100 futures were mostly unchanged.

The main averages on Wall Street were mixed at the end of trading on Friday, with the focus on the prospect of impending Fed rate cuts and a crucial talks between President Trump and Russian counterpart Vladimir Putin.

Touching a fresh intra-day high was the blue-chip Dow Jones Industrial Average, which joined the benchmark S&P 500 and tech-heavy Nasdaq Composite in reaching a new all-time peak at some point last week. The S&P 500 and Nasdaq finished the session lower, however, due largely to a slide in technology, financials, industrials, and utilities stocks.

FOMC meeting minutes, Powell speech ahead this week

Traders are now gearing up for the release on Wednesday of minutes from the Fed’s last policy gathering in July, when the central bank chose to keep borrowing costs steady at a range of 4.25% to 4.5%.

Yet the decision was met with the rare dissent of two Fed officials for the first time in decades. Fed Governor Christopher Waller and Fed Vice Chair for Supervision Michelle Bowman both advocated for a rate reduction, arguing that it was necessary to help prop up a softening labor market.

Subsequent data has shown that U.S. jobs growth was significantly weaker than anticipated last month, while the totals for June and May were revised sharply lower. Meanwhile, retail sales rose strongly, following an unexpectedly steep uptick in producer prices.

These figures, coupled with relatively restrained consumer price indicators, have painted a complex picture of a possibly slowing labor market and some tariff-driven -- albeit relatively muted -- inflationary pressures.

All this comes as Trump’s actions have also cast doubt over the reliability of U.S. government data and led some analysts to predict a surge of interest in private-label numbers. Trump sparked these worries after he dismissed the commissioner of the agency charged with collecting the statistics, citing without evidence that the downward revisions in the latest jobs report were designed to hurt him politically. He later nominated the chief economist from the conservative think tank Heritage Foundation to lead the agency.

Stepping into these crosswinds will be Fed Chair Jerome Powell, who will deliver a closely-watched speech at an annual symposium in Jackson Hole, Wyoming on Friday. Powell has long advocated for a more cautious approach to policy actions, but markets -- who are themselves penciling in a rate cut at the Fed’s next meeting in September -- are curious to see if his opinions have shifted after the recent data deluge.

Zelensky to meet Trump

Ukraine’s Volodymyr Zelensky is due to meet with Trump in Washington on Monday in a bid to arrange the outlines of a potential peace deal.

But worries remain that Trump could try to use the talks to drive Zelensky into a settlement agreement that has been viewed as favorable to Russia. Zelensky has already appeared to dismiss the contours of proposals presented to Trump by Putin at a summit in Alaska on Friday, which included Ukraine losing a chunk of its eastern Donetsk region.

Zelensky, who will be flanked by leaders from a host of European countries as he meets with Trump, has said he supports a "swift and reliable" termination to the more than three-year-old conflict, but said Russia must be willing to end the war "it started."

Trump, for his part, said in a post on his Truth Social platform that Zelensky can "end the war with Russia almost immediately, if he wants to, or he can continue to fight."

"[T]he Ukraine situation seems to be entering a highly fluid state, and there could be additional developments in the days, weeks, and months ahead," analysts at Vital Knowledge said in a note to clients.

They added that, from a markets perspective, the Trump-Putin talks in Anchorage did not feature any of the major outcomes investors had been bracing for, such as a complete ceasefire or "draconian secondary tariffs on China."

Palo Alto Networks to report

On the earnings front, cybersecurity firm Palo Alto Networks is expected to headline the slate of July-quarter returns after the closing bell on Monday.

The group is seen posting fiscal fourth-quarter adjusted earnings per share of $0.89 on revenue of $2.5 billion, according to Bloomberg consensus forecasts.

It will be the first report after Palo Alto bought Israeli rival CyberArk Software in a roughly $25 billion deal in July -- the largest such purchase in the company’s history.

While it was viewed as a push by CEO Nikesh Arora to help the business take advantage of artificial intelligence-fueled demand for digital security solutions, analysts flagged concerns around Palo Alto’s ability to fold a platform of CyberArk’s size into its existing operations.

Palo Alto has completed the acquisitions of at least seven firms over the last two years.

Gold rises

Gold prices were higher in European trade on Monday, recovering from a more than two-week low as safe havens remained in vogue amid dialogue over the Russia-Ukraine war.

Uncertainty before the Jackson Hole central bank symposium this week also favored gold and weighed on the dollar, as markets maintained bets that the Fed will cut rates next month.

Spot gold advanced by 0.6% to $3,355.47 an ounce, while gold futures for October rose 0.5% to $3.400.55/oz by 03:22 ET. The yellow metal had fallen to an over two-week low last week.

source :investing

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Adam

Stocks

MARKET WRAPS

European stocks were lower at the start of the week, with shares in renewable companies bucking the trend and rising in opening trade after the U.S. published better-than-expected guidelines on which projects will qualify for wind and solar tax credits.

European leaders were travelling to Washington to join with Ukrainian President Volodymyr Zelensky in meeting Trump on Monday, and are expected to push back against Russian efforts to dictate peace terms in the war.

A resolution could be a boon for markets if it reduces geopolitical uncertainty and buffers global energy supplies, creating a more stable environment for trade after months of turmoil related to U.S. tariff policy.

Stocks to Watch

Novo Nordisk shares were rising after the U.S. approved another use for Wegovy.

U.S. Markets:

Stock futures pointed to a muted open.

This week's set-piece event is the Jackson Hole central-bank gathering in Wyoming, slated for Thursday through Saturday.

Investors will be glued to the Federal Reserve Chair's speech, hoping for insight into whether the central bank might kick off interest-rate cuts in September.

The Fed is also set to release minutes from its July meeting, and investors will seek further clues as to the health of the consumer as the reporting season effectively wraps up with results from big-box retailers, including Home Depot, Target and Walmart.

Forex:

The dollar rose marginally as investors awaited Jackson Hole.

Sterling could break above the key $1.36 resistance level if U.K. inflation data on Wednesday exceed expectations, Convera said.

Bonds:

Long-end eurozone government bond yields recovered, with 30-year Bund yields off from Friday's multi-year high.

The big moves in eurozone rates were coming from the long end of the curve, where both fiscal concerns and Dutch pension reforms were putting upward pressure on yields, ING said.

"While these structural drivers are acting on the back end, markets will let economic data determine the way forward for shorter maturities."

RBC Capital Markets has been running an outright hedged euro 5-30-year curve steepener in its portfolio since last year.

And while it said the drivers and catalysts of last week's moves--with weakness in long-end bonds in particular--remained a topic for debate, RBC found there were potentially new catalysts at work as well that aided this very recent steepening move in particular.

"These significant technical breakouts add further conviction to our long-standing structural curve steepening views and could be indicating that we will see more of this to come sooner versus later."

AXA Investment Managers said that Treasury yield volatility had been even more contained this summer than is typically the case, despite the concerns about the Fed, inflation, and the long-term budget situation.

The fact that 10-year Treasury yields were hovering around 4.25% showed demand was strong, it added.

Goldman Sachs continued to favor longs in front-end Treasurys, as markets continue to price in a Fed rate cut in September.

"U.S. rates remain in a holding pattern having cleared the latest batch of inflation news without any real fireworks."

While the base case for a September cut remained on solid footing, it might take a definitive signal from the Fed or corroboration of a weaker labor market backdrop to price in a faster cadence of cuts.

Energy:

Oil prices were mixed and fell further earlier in the session following the Alaska summit between Trump and Putin, after the meeting's tone lowered the risks of stricter sanctions on Russia and its energy flows, ING said.

Trump said he would hold off secondary tariffs on China for buying Russian oil, while bearish oil fundamentals will likely drive prices moving forward, and Monday's meeting Zelensky will be closely watched for further developments, it added.

Metals:

Gold futures ticked higher, though they remained within a narrow price range in relatively thin trading.

U.S. tariff de-risking and Russia-Ukraine peace talks were among factors capping safe-haven demand for gold, Phillip Nova said, adding it expected the metal to stay range bound and sensitive to headlines, with the market toggling between bearish on gold if geopolitical stress eases and bullish if real yields fall.

ANZ said the precious metal's price fall on week appeared temporary pointing to macroeconomic and geopolitical risks intensifying in the second half.

Waning trust in U.S. assets and volatile geopolitics should encourage central banks to further diversify reserves into gold, it added, which should see gold breach record highs later this year.

EMEA HEADLINES

European Leaders to Back Zelensky in Washington, Hoping to Counter Putin

BRUSSELS-European leaders will travel to Washington with Ukrainian President Volodymyr Zelensky to meet with President Trump on Monday, aiming for unity in pushing back against Russian efforts to dictate peace terms in their war.

The leaders of France, Germany, Italy, Britain, Finland, the European Union and the North Atlantic Treaty Organization said they would join Zelensky at the White House. Zelensky on Sunday traveled to Brussels to meet with European Commission President Ursula von der Leyen, a top EU leader, and hold a video call with the other leaders to prepare for the meeting with Trump at the White House.

Jeweler Pandora Not Planning Fresh Price Hikes as Demand Shrugs Off Tariffs, CEO Says

Danish jeweler Pandora has no plans for price hikes on top of those already implemented after not seeing any hit on U.S. demand due to President Trump's tariffs, its chief executive said.

The company raised prices globally three times over the past year and is carrying out a cost-cutting program in a bid to mitigate pressures on profitability from the tariff fallout and higher costs for gold and silver in a tough consumer environment.

MTN Group Raises Midterm Target, Reshuffles Executive Committee

MTN Group raised its midterm target for service revenue growth and reshuffled its executive committee as part of a review of its strategic priorities.

The South African telecommunications group said Monday that it is now targeting growth in service revenue-a closely watched metric for the industry-of at least high teen percentages over the medium term. It previously targeted growth of at least mid-teens.

GLOBAL NEWS

Global Economy Took Tariff Hike in Its Stride, But Stronger Headwinds Are Ahead

The global economy appears to have taken a sharp rise in U.S. tariffs and increased uncertainty about the future of the international trading system in its stride, but faces stronger headwinds as tax rates continue to climb.

As more countries release figures for economic growth that cover the second quarter of this year, a clear pattern has emerged. Those that grew rapidly in the first quarter as U.S. businesses raced to build up inventories ahead of higher tariffs slowed in the second quarter as those duties were imposed.

Taiwan Shares Close at Record High

Taiwan shares hit a new record high as investors cheer easing trade tensions and a brighter outlook for the island's major tech exporters.

The benchmark Taiex index ended 0.6% higher at 24482.52 on Monday, topping its previous closing high in July 2024.

More National Guard Soldiers Head to D.C. and Prepare to Carry Weapons

More National Guard troops are heading soon to Washington, D.C., and they are preparing to start carrying weapons in the coming days, officials say, a major shift that comes days after President Trump said he was deploying them to "take back" the capital from what he described as violent criminals.

Defense officials previously had said the 800 National Guard soldiers deployed wouldn't be armed, unlike many federal law-enforcement agents sent to the capital. They also weren't to have weapons in their vehicles. "Weapons are available if needed but will remain in the armory, " the U.S. Army said in a press release Thursday.

Israelis Hold Nationwide Protests and Strike to End Gaza War

TEL AVIV-The families of Israeli hostages held in Gaza led nationwide protests and a strike calling for their loved ones to be freed and for an end to the war in Gaza, a sign of growing domestic pressure to wrap up the fighting even as Israeli Prime Minister Benjamin Netanyahu says he plans to expand it.

Protesters blocked big highways across the country on Sunday morning-the start of the working week in Israel-as part of demonstrations that took place in more than 300 locations and drew hundreds of thousands of Israelis, according to organizers. Major Israeli universities and some businesses and tech companies said they would strike for the day in support of the families. More than 30 people were detained for disrupting public order, according to Israeli police.

Source: morningstar

Risk Warnings and Disclaimers

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Glendon

Economic

Cryptocurrency

Goldman Sachs Predicts Fed Rate Cuts in 2025

Goldman Sachs predicts the Federal Reserve will cut interest rates three times in 2025, starting September, due to weaker tariff impacts and a softening labor market.

This forecast could enhance risk sentiment and potentially buoy cryptocurrency markets, affecting assets like Bitcoin and Ethereum with anticipation of Federal Reserve policy easing.

Goldman Sachs has revised its forecast, anticipating the Federal Reserve will cut interest rates three times in 2025. The decision comes as part of an accelerated timeline due to weaker-than-expected impacts of tariffs on inflation.

Fed Rate Cuts Forecast

Goldman Sachs has revised its forecast, anticipating the Federal Reserve will cut interest rates three times in 2025 due to weaker-than-expected impacts of tariffs on inflation. Led by chief economist Jan Hatzius, the Goldman Sachs research team projects rate cuts of 25 basis points, scheduled for September, October, and December. The revised forecast highlights softening labor market indicators.

Market Impact

Market impacts of these rate cuts could be substantial, notably for cryptocurrency markets. Historically, such monetary actions improve risk sentiment, leading to increased demand for assets like Bitcoin and Ethereum. The broader financial implications include anticipated shifts in asset allocation. Lower interest rates generally foster increased investment in riskier assets as investors seek higher returns. This has been seen in previous easing cycles.

"We now see three 25 basis-point cuts in September, October, and December... The main reason... is because they believe the Trump tariff strategy may not have a large, lasting impact on consumer price inflation... But the very early evidence suggests that the tariff effects look a bit smaller than we expected, other disinflationary forces have been stronger..." — Jan Hatzius, Chief Economist, Goldman Sachs

Broader Implications

The financial community may perceive these cuts as a response to macroeconomic conditions. They could stimulate investment and lending activity. Similar policy moves in past cycles led to increased crypto valuations, highlighting potential benefits. Insights from past cycles suggest that rate cuts often lead to improved liquidity conditions. Cryptocurrency markets, including Bitcoin and Ethereum, might experience price increases and heightened trading activity as investors react to market conditions.

Source: CryptoSlate

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Winkelmann

Stocks

Forex

Political

Economic

Political pressure, changing personnel and a complex mix of macroeconomic data in recent weeks have renewed the focus on the Federal Reserve and its policy direction. Compared to the bond markets, equity markets seem to be taking these developments in stride.The past few weeks have been captivating for Federal Reserve watchers. The resignation of board governor Adriana Kugler and temporary replacement by President Trump appointee Stephen Miran has coincided with the emergence of an expanding list of possible successors to chair Jay Powell and the release of a swath of policy-influencing macroeconomic data.

Taken together, this has renewed the focus on the Fed and future policy direction, which the market still currently expects to head lower even though the path is being made more complex by a mix of positive and negative employment and inflation prints.The hot Producer Price Index data—showing wholesale inflation rising 0.9% from a month earlier and 3.3% from a year ago—provided a fresh example last week, overshadowing the earlier broadly benign Consumer Price Index data and unsettling the U.S. equity and bond markets.

After equities had rallied to fresh highs earlier in the week on the CPI data (core CPI year-over-year was in line with expectations at 3.1% in July) and expectations the Fed would cut rates in September, the PPI print halted the march higher and in parallel pushed up Treasury yields, especially at the short end.As a result of last week’s data—including broadly resilient July retail sales reported on Friday—the market is still pricing in a rate cut next month. It’s just no longer fully pricing in a quarter-point cut, as it did at the start of the week.

Such a reaction to the PPI data broadly reflects two views: equity investors see the threat inflation poses to their bet of a soft landing and a more accommodative policy environment, while bond investors see a longer period of above-target inflation, higher economic growth prospects and continued deficit concerns.

Small Cap Signal

A more accurate reading of what the equity and bond markets are signalling is complicated. Combined with multiple exogenous factors influencing the shape of the yield curve, bond investors are clearly preoccupied by the impact of sticky inflation and any weakening in the labor market on monetary easing.Yet many equity investors are instead more focused on the Fed and continued easing, which would accelerate business and consumer investment, and, through lower financing costs, support smaller companies, especially those in more interest-rate sensitive cyclical industries.

The move higher in the Russell 2000 small cap index in recent weeks—extending a stronger performance overall and especially lower-quality parts of the market over the past few months—gives some support to this, indicating investors are beginning to price in a more accommodative monetary environment as the U.S. economy potentially begins to accelerate out of the current slowdown.When that may happen is uncertain, but we believe that muted economic growth in the next few quarters is unlikely to approach recessionary levels, and that the economy will continue to demonstrate resilience, particularly to the impact of tariffs and the extent they are being absorbed by companies and consumers.

Further fortifying this resilience and boosting the prospects for growth over the medium term is the administration’s deregulation drive and the passing of the U.S. tax and spending bill. As well as helping to bolster disposable income and sustaining consumer demand, the bill will more significantly benefit small and medium-sized companies by introducing several pro-growth measures aimed at stimulating innovation, investment and domestic production.

Risks to Easing Remain

Looking ahead, the focus now turns to three more major data releases—July Personal Consumption Expenditures, August CPI and August non-farm payrolls—in the coming days as well as the Jackson Hole symposium.

Much of the focus will likely fall on the August jobs report, but the relative strength or weakness of the overall economy will also be a driving factor in the Fed’s messaging coming into and out of Jackson Hole and the September meeting.In our view, there is likely little to disrupt the near-term path to lower rates, but any evidence showing that services prices are reversing their downward trend could jeopardize rate cuts slated for 2026 and keep the Fed above the 3.5% mark moving into middle of next year.

In addition, evidence of continued political pressure on the Fed could also push yields higher and disrupt efforts to effect more accommodative policy.History tells us that August and September can bring market volatility, and to some extent we are already seeing this. However, looking through these periods, our medium-term outlook remains constructive.What’s more, we believe the combination of lower rates to come, deregulation and the pro-growth measures of the tax and spending bill continue to create an attractive case for small and mid-caps, which is why the Asset Allocation Committee is overweight the sector.