Markets Soar as Inflation Cools—Bullish Signals Flash Green
Inflation data takes a chill pill—and markets go berserk.
The Rally Nobody Saw Coming
Risk assets exploded upward after the latest CPI print showed price pressures easing faster than a Wall Streeter dodging accountability. Crypto led the charge—BTC punched through resistance levels like they were made of wet tissue paper.
Traders Front-Run the Fed
Futures markets now price in three full rate cuts by December. Because clearly, central banks have a flawless track record of sticking to their dot plots (spoiler: they don’t). Alts surged double-digits while the S&P notched another ATH—proving once again that money printers go brrr until they don’t.
The Cynic’s Corner
Of course, this ‘soft landing’ narrative assumes corporations will suddenly stop price-gouging. Good luck with that.
In brief
- American indices rise after the release of July inflation figures below expectations.
- Investors now almost unanimously anticipate a Fed rate cut as early as September.
- The bond market relaxes, with 10-year and 30-year yields significantly down.
- Chinese tech giants jump, boosted by a calmer trade climate and prospects of lower US rates.
Wall Street driven by anticipation of a monetary shift
While many investors believe that a further drop in inflation could boost Bitcoin more, American indices opened higher Wednesday morning, following the July Consumer Price Index (CPI) report.
Although inflation slightly increased, it remained below forecasts, strengthening the hypothesis of rapid monetary easing.
Weakness signals from the labor market reinforce the monetary policy easing scenario.
Here are key highlights related to the indices at session opening :
- The Dow Jones : +0.84 % at 44,830.33 points ;
- The S&P 500 : +0.4 % ;
- The Nasdaq Composite : +0.31 % at 21,748.34 points ;
- The probability of a rate cut in September : nearly 100 % (CME Group);
- The 10-year yield : 4.25 % ;
- The 30-year yield : 4.84 % ;
- The most dynamic sectors : consumer discretionary (+0.7 %) and technology (+0.6 %).
This bond market easing reflects a rapid adjustment of rate expectations and strengthens the appetite for credit-sensitive stocks. Investors seem already positioning for an environment where the cost of capital WOULD be lower, potentially boosting profits of cyclical and tech companies.
Crypto, IPO, and Asian markets in turmoil
Beyond the American Wall Street indices, the news was marked by the IPO of Bullish, the operator of a crypto platform and owner of CoinDesk.
Priced at $37 per share, above the anticipated range, the IPO price values the company at $5.41 billion and enables it to raise $1.1 billion. This success contrasts with its aborted 2021 attempt via a SPAC.
More broadly, the crypto market benefits from a favorable US political environment and renewed institutional interest, illustrated by the growth of various altcoins.
Asian markets also benefited from this supportive context. Tencent jumped 4.7 % after announcing revenue growth above expectations (+15 %), while Alibaba and JD.com gained 3.6 % and 2 %, respectively.
The easing of trade tensions between Beijing and Washington and hopes for more accommodative monetary policy in the United States fuel this movement. The VIX, a volatility index, fell to 14.49, its lowest level since December 2024, confirming investor confidence, or complacency.
Between positive macroeconomic signals, monetary easing expected in September as anticipated by Goldman Sachs, and catalysts specific to the crypto and tech sectors, markets evolve in a marked optimistic climate. However, upcoming releases, notably the Producer Price Index and retail sales, could reshape this scenario.
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