Not just a cut, but a 50bp cut? [Video]

US inflation came in mixed, but the market chose a clear direction. Core inflation surged to 3.1% in July, while headline eased to 2.7%, yet September Fed rate-cut expectations soared to 94% from 80%. US 2-year yields dropped, the dollar slipped below its 50-DMA, and equities rallied: S&P 500 hit a fresh ATH, mid-caps +2%, small caps +3%.

Treasury Secretary Scott Bessent now calls for a jumbo cut, fueling a potential yield curve steepening — short rates fall, long rates stubbornly high due to US debt. Meanwhile, a softer dollar supports major currencies and emerging markets thanks to lower borrowing costs. The EURUSD climbs, cable tests 1.35, and the AUDUSD rallies despite RBA cuts. Oil could hop to find a floor near $60pb, with OPEC expecting tighter markets while geopolitical risks could push prices toward $65pb in the aftermath of Trump/Putin meeting.