America had another ‘bad news is good news’ moment yesterday; softer-than-expected ADP and growth data further fueled expectations that the Federal Reserve (Fed) is – maybe – good for a pause. The S&P500 gained for the 4th consecutive session yesterday, as US 2-year yield settles below the 5% level on expectation that the Fed has no reason to push hard to hike rates; it could just wait and see the impact of its latest (and aggressive) tightening campaign. In the FX, the softening Fed expectations are weighing on the US dollar, but keep in mind that the seasonality is on the dollar’s side in Septembers! But the dollar’s relative performance is also much influenced by the growth and price dynamics elsewhere. Despite the dark clouds on the European skies, the latest inflation numbers showed that inflation in both Spain and Germany ticked higher in August for the second month warning that the aggregate CPI number may not confirm a fall to 5.1% in headline inflation due to rally in energy prices. Later, investors will focus on the US core PCE data, which has a heavier weight on the international platform. Therefore, the strength of the US core PCE will say the last word before tomorrow’s jobs data. Listen to find out more!

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