Wall Street Rallies as Rate Cut Probability Surges
Unexpected economic data has sent shockwaves through financial markets, with Wall Street surging as traders price in near-certain Federal Reserve action. The Producer Price Index (PPI) rose just 2.6% annually, significantly below expectations, while Core PPI slipped into negative territory. Services costs—a key Fed metric—declined 0.2%, led by sharp drops in trade services and wholesale margins.
Futures markets now reflect 100% certainty of a rate cut at next week's FOMC meeting, with an 11.3% chance of an aggressive half-point reduction. The last cut occurred during political transition in December, making this potential MOVE particularly significant for risk assets. Treasury yields fell immediately as traders repositioned for looser monetary policy.
