Central Banks Ease While Fed Holds Steady

Key Takeaways

1. Central banks outside the U.S. cut rates while the Fed held steady.

2. Trump extended the tariff truce with China but added new tariffs elsewhere.

3. U.S., Japan, and Australia stock markets hit record highs.

4. Gold remains near record highs while oil dropped to a 5-week low.

5. Big tech faced more regulation and fines in the U.K. and EU.

Interest rates are like the gas pedal for the economy. Push down and things speed up. Ease off and they slow down. Last week, several central banks decided to press down a little harder. The Bank of England trimmed its rate to 4.00 percent in a close 5–4 vote. Australia’s RBA cut again to 3.60 percent, marking its third cut this year. China announced a "moderately loose" plan with rate reductions and stimulus. The U.S. Federal Reserve kept rates steady at 4.25 to 4.50 percent, though a few members want cuts in September. In simple terms, most of the world is making borrowing cheaper while the Fed is still thinking it over.

On the geopolitical stage, the headline is the upcoming Trump and Putin meeting in Alaska. Officially it is about Ukraine. Unofficially it reminds us that "land swapping" sounds more like Monopoly than foreign policy. European leaders, worried about a bad deal, are meeting in advance to coordinate. In U.S.–China trade news, the tariff truce got a 90-day extension. Soybean prices jumped after Trump urged China to quadruple purchases. At the same time, he added new tariffs on India, Syria, Laos, and Myanmar.

Markets like any sign of peace, even a temporary one. The S&P 500 and Dow Jones reached new highs. Japan’s Nikkei broke a record for the first time in a year. Australia’s ASX 200 set a new high after the rate cut. European markets rose but gains were smaller, with August’s usual lack of energy weighing on sentiment. Technology stocks led the way, especially semiconductor companies benefiting from the tariff truce.

Corporate earnings brought a mix of surprises and the predictable. Palantir’s revenue topped $1 billion for the first time. Deckers posted 17 percent growth thanks to Hoka and Ugg sales. Tesla gave a mixed report with a warning about legislative risks. H&R Block’s strong seasonal results were about as surprising as tax day coming in April.

Commodities gave investors a little of everything. Gold is up almost 36 percent from last year, although it fell slightly after Trump reassured markets it was safe from tariffs. Oil fell to a 5-week low as slower economic growth outweighed supply concerns.

Bond markets and inflation data were mixed. U.S. Treasury yields came down from recent highs but remain above last year’s levels. U.S. inflation expectations ticked up. The U.K.’s CPI rose to 3.6 percent. The Eurozone forecasts inflation of 2.0 percent for 2025. Hawks, doves, and fence-sitters all have numbers to point to.

Regulators turned up the heat on big tech. The U.K. gave Google a "Strategic Market Status" label. The EU fined Apple and Meta. Investigations into pricing and platform practices are growing. Even companies with wide moats have to deal with regulators who do not like toll gates too high. For long-term investors, this week’s story was about policy shifts, market highs, and the reminder that change is constant. If you enjoyed this update, share it with a friend by forwarding this email. The more people who understand markets beyond the headlines, the better.

Happy investing!
Josh

The information is provided for educational purposes only and does not constitute financial advice or recommendation and should not be considered as such. Do your own research.