Market Jitters: Fed Rate Cut Bets Surge Amid Global Inflation Concerns

Traders are ramping up their bets on a Federal Reserve rate cut, pinning the dollar near multi-week lows. Meanwhile, a global stock rally has paused as investors await U.S. producer prices data that could illustrate tariff impacts on inflation trends. MSCI's global share index stagnated after reaching record highs in recent sessions.

Signals from futures markets suggest a conservative opening for Wall Street stocks, which have boosted global shares all week. This global rally is driven by strong tech earnings in the U.S. and speculation of Fed rate cuts to counteract tariff impacts. A September rate cut appears almost certain to traders as the U.S. administration pressures the Fed for quicker action.

The bond market reflects investor concerns over persistent inflation eroding bond values, with rising yields on longer-dated debt. Commodities remain calm ahead of a U.S.-Russia summit, where potential geopolitical tensions may also cause market ripples. Lack of progress in Ukraine could trigger new sanctions, although immediate market disruptions are expected to be limited.

(With inputs from agencies.)