Too ready for a Fed easing cycle?
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Why are markets betting on a Fed rate‑cut this week?
Well, markets are positioning themselves for the Fed this week. The assumption seems to be that the cut will be the first of a broader easing cycle. But what if it isn't? Could we have got ahead of ourselves? And after a bunch of soft data yesterday, not just from the US, China as well in particular. What will we see today? With jobs data for the UK, CPI for Canada, and retail sales for the US? All of that before the central banks start meeting. It's busy, busy, busy. It's Tuesday, it's the 6th. 16th of September 2025. It's the morning call from NAB. Good morning. Well, US equity's got the week off to a good start. The NASDAQ hit a record high up almost one percent at the US close on Monday, just now in fact, half a percent up for the S P, also a new high, not point one percent for the Dow.
The Russell 2000 up by a third of one percent. Apple is up three point six percent, making it one of those companies now worth over three trillion dollars in the company of Apple, Nvidia, and Microsoft. There's four of them now. The US dollar is down 0.3%. Below ninety seven point three on the DXY index, the Aussie is up almost naught point four percent, now over sixty six point seven US cents, onwards and upwards as they say, but not the leader today. The Canadian dollar is up half percent, the pound is up about the same as the Aussie, the euro is up naught point three percent, and bond yields are lower just about everywhere, down two basis points for ten years in the US, down one in Canada, down four in the UK, down two in Germany.
Well Aussie. ten years were up six basis points yesterday to four point two seven percent. Today on futures, just one basis point lower than that. Uh we saw yields move a lot less at the front end of the curve as well yesterday, just three basis points for two years in Australia. And oil is higher, 0.9% for WTI, a three quarters of one percent higher for Brent, which is a around sixty seven fifty a barrel now. Uranium is up a fair bit as well. Well the ETFs are anyway because uh the Trump administration wants
What does the Fed’s June dot‑plot tell us about future easing?
To build up their strategic reserves of uranium rather than relying on supplies from Russia. And gold higher again as well today up 1% and hitting another record high. It's a day for record highs. And here's Nab Sally Old this morning. So the market's obviously getting ready for the Fed on Wednesday or Thursday morning our time. But we know there's going to be a cut. Uh what's next is the question, isn't it? What's going to be in the dot plots? Is this the a one-off or is this the star of a Substantial easing cycle.
Yeah, good morning, Phil. Well, markets, you know, are clearly pretty buoyed up uh with the prospect of not just one cut, but multiple rate cuts to follow. Having said that, you know, when you look at uh I guess what the Fed's forecasts were back in June when they last released uh their their economic projections, they're actually broadly tracking pretty nicely on the growth story and then also on the unemployment rate story. Um inflation story, you know, needs a little bit of of tweaking, but but not a huge amount. And so I guess the sense that you know things are broadly as it as the Fed expected um back in June suggests that you're not going to see like a a sort of mass revision to the dots. Um, you know, clearly some people will will change um
will have changed their perspective over the last couple of months. But my my sense would be that you know, I still think there's a good chance that the median expectation will be, you know, the cut in this week, so the cut in September plus one more before the end of the year. And
that's it. 'Cause I mean uh there is I mean, people have been talking up more, haven't they? I guess it is. It depends on, you know, which members of the the Fed you're listening to, because there's plenty of room for disputed opinions 'cause it depends on, you know, what side of the dual mandate they're focused on. Is it stable prices or is it maximum employment? And um There seems to be a lot of emphasis being placed on employment, but you're saying, well, it's it's not, you know, it's not really out of kilter with w where they thought it would be.
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Chapters
8 chapters
1
Why are markets betting on a Fed rate‑cut this week?
0:01–1:46
2
What does the Fed’s June dot‑plot tell us about future easing?
1:46–3:42
3
How could weaker Chinese activity data affect global markets?
3:42–6:40
4
Why is the Australian‑US bond spread widening and what does it mean?
6:40–9:00
5
What are the key US data releases (retail sales, CPI) we should watch today?
9:00–10:49
6
Will Canada’s core CPI and upcoming BoC decision spark more stimulus?
10:49–12:47
7
How are UK labour‑market numbers influencing expectations for the BoE?
12:47–15:29
8
What is the outlook for the Eurozone after the latest ECB meeting?
15:29–17:20