Wealth & financial wellbeing

The markets’ expectations for a rate cut in the US have heightened, but there is a fair amount of noise surrounding the decision. Investors are still optimistic, yet the conditions for consumers are under question.

The US dollar has materially weakened since the beginning of the year, with the dollar index down -10.3%. After many years of resilience, the greenback has softened against the euro, yen and sterling as traders recalibrate expectations for the most traded currency in the world.

The largest US technology stocks – led by the 'Magnificent Seven' which includes Apple, Microsoft, and Meta – have grown profits at nearly three times the pace of the broader market over the last 15 years. But with investors still willing to pay a premium for these big names, is a bubble now forming in mega-cap tech?

Long-term government bond yields have been steadily rising across the US, France, and the UK, and events this week have brought this into the spotlight. Investors have less fiscal confidence in some of the major economies due to political uncertainty and government trust faltering, pushing borrowing costs higher.

Inflation rose above expectations in July’s data print, now sitting at 3.8%, the highest year-on-year increase since January 2024. UK Inflation is slowly but surely ticking up, with this figure rising above the 3.6% rise we saw in June.

What Has Been Driving Markets this week? On Thursday, the US Producer Price Index (PPI), which is an inflation indicator that tracks what businesses pay for goods, jumped 0.9% month-on-month.