Global markets kick off the week on the back foot following a sharp repricing of US rate expectations. After Friday’s soft jobs data and ISM employment reading, which came in at its lowest since mid 2020, markets swiftly shifted to price in a near 90% chance of a Fed rate cut in September, triggering a broad decline in Treasury yields and a weaker dollar.
In FX, commodity currencies lagged amid falling oil prices and renewed demand-side concerns, while the yen found support on rate differentials.
In Asia, attention turns to subdued data out of Japan and Australia, where liquidity withdrawal and easing inflation trends remain the theme.
Meanwhile, the European sentiment gauges and Swiss inflation are expected to reinforce a dovish backdrop with Swiss CPI staying well below SNB targets.
Political risks are simmering again after reports President Trump ordered US nuclear submarines near Russia and dismissed the Bureau of Labor Statistics Commissioner—developments that may add headline volatility to an already fragile macro picture.
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