US Dollar Near Two-Month Low as Markets Await Inflation Data 
Australia Inflation Cools as Core CPI Misses Forecasts, Easing RBA Rate Hike Pressure 
Oil Prices Rise as Hormuz Reopening Remains Uncertain 
Ukraine’s drone strikes are having an impact on Russia — but Russian leaders remain committed to war 
Chile Central Bank Holds Interest Rate at 4.5% as Inflation and Global Risks Persist 
Japan PM Sanae Takaichi Unveils Growth Plan as BOJ Independence Concerns Lift Bond Yields 
Gold Prices Steady as Hormuz Tensions Fuel Fed Rate Concerns 
South Korea Raises Interest Rates to 2.75% as Inflation and Weak Won Drive Tightening 
Asian Stocks Mixed as Chip Selloff Hits KOSPI, Nikkei Ahead of US Jobs Data 
Gold Slips Below $4050 as Bond Yields Surge to 4.7% on Fed Inflation Concerns – Sell Rallies at $4060 Targeting $3940 
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RBI Holds Repo Rate at 5.25% as Inflation Risks and Global Uncertainty Persist 
China Inflation Cools in July as CPI Misses Forecast, PPI Deflation Eases 
Trump Unveils $3 Billion U.S. Critical Minerals Push 
The Federal Reserve’s latest policy signals suggest that interest rates are now close to neutral, raising the bar for additional rate cuts in 2025 and beyond. This shift implies restraint rather than rescue from the central bank, pushing investors to rely more on fixed income performance unless a clear recession emerges.
At its December meeting, the Fed delivered a 25 basis point rate cut, the third cut of the year, bringing rates to a level policymakers believe neither stimulates nor restricts economic growth. Fed Chair Jerome Powell emphasized that policy now sits within a broad range of neutral estimates, adding that the central bank is “well positioned to wait and see how the economy evolves.” This language underscores a more cautious, data-dependent approach to future monetary policy decisions.
Historically, periods when rates hover near neutral demand a unified Federal Open Market Committee, as policy mistakes can have outsized consequences. Cutting too aggressively could reignite inflation, especially as many anticipate more expansionary fiscal policy under President Donald Trump. However, the latest meeting highlighted divisions within the Fed, raising doubts about policymakers’ confidence in their own outlook. While the Fed’s Summary of Economic Projections points to steady growth above 2%, a resilient labor market, and gradually easing inflation, some market participants remain skeptical about how smooth that path will be.
Markets and policymakers also diverge on expectations for future rate cuts. Investors are pricing in up to two cuts next year, while Fed officials continue to signal just one, if any. The broader message, according to investment professionals, is that investors should not expect significant additional easing without a recession or a sharper slowdown in employment and inflation.
With equity valuations stretched, particularly in AI-related stocks, fixed income is increasingly positioned to play a larger role in portfolios. Bonds may provide stability and income as the Fed pauses near neutral, though selectivity remains crucial as credit markets still appear aggressively priced. A final risk lingers: if growth accelerates and inflation rises, the Fed could be forced to pivot back toward tightening, a scenario that could catch markets off guard.
