Higher expectations for a rate cut
After a weak labor data last week that has forced the Federal Reserve to cut the rate by three times this year, JPMorgan’s trading desk also warned about “sell the news’s events as the investors pull back from the US equity market. Following through on a widely expected interest rate cut on 18 September, with odds more than 80% in 25 bps, while some are leaving on the 50bps rate cut.
Global Instability
As per CNBC, the two federal courts ruled President Trump’s emergency tariffs illegal, which Trump is now seeking a Supreme Court reversal. If unsuccessful, the U.S. may need to refund importers $750 billion to $1 trillion, per Treasury Secretary Scott Bessent, albeit he said he’s quite confident in this case.
Meanwhile, Indonesian Minister of Finance, Sri Mulyani Indrawati, who has a global investor has high expectations in bringing more stability to the Indonesian economy, has now been removed. This led to uncertainty and panic in the market, resulting in a market sell-off.
Secondly, French Prime Minister Bayrou resigned due to a loss in a confidence vote, with 194 lawmakers voting in support and 364 voting against. Along with the debt concerns, all of these are leading to more instability and making the safe-haven asset more attractive.
Mounting Geopolitical tension:
Despite UN condemnation, Israeli forces killed more Palestinians and destroyed infrastructure in Gaza. Israel issued new evacuation warnings on Monday, threatening bombings, while other countries, such as Spain, imposed an arms embargo to pressure Israel to end the conflict.
