US Stocks Hit Record as PPI Cools to 4.7%; ASX Futures Fall 39 Pts

For Australian investors and traders, the overnight tape delivered two signals: US risk assets are pricing in a friendlier rate path, yet ASX futures are pointing lower by 39 points. The divergence matters because it highlights how local positioning, commodity exposure, and the US-Australia rate differential can override a record Wall Street close. With Fed hike odds sliding from 50% to 35% in two days, the bond and equity rally is now squarely a rates story.

Wall Street extended its record run on 13 August after the latest US wholesale inflation reading cooled more than expected, reinforcing hopes that the Federal Reserve will refrain from raising interest rates at its next meeting. The S&P 500 climbed 0.7 per cent to a fresh all-time high, eclipsing the prior record set the week before. The Dow Jones Industrial Average added 69 points, or 0.1 per cent, while the Nasdaq Composite gained 0.8 per cent. Easing oil prices in their latest yo-yo move provided an additional tailwind for equities, lowering energy-cost concerns for businesses and consumers alike.

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With Fed hike odds sliding from 50% to 35% in two days, the bond and equity rally is now squarely a rates story.

The market's focal point was the producer price report showing US wholesale prices were 4.7 per cent higher in July than a year earlier. That is still elevated by historical standards, but it marks a meaningful deceleration from June's 5.5 per cent year-on-year rate and came in slightly better than economists had forecast. The data followed a similar cooling update on US consumer prices released the day before, creating a picture of disinflation that investors found encouraging. If this trend continues, the Fed could decide to hold off on further rate hikes. Higher rates are a blunt tool: they help cap inflation by intentionally slowing the economy and making borrowing more expensive across the board.

Bond markets responded immediately. The yield on the 10-year Treasury fell to 4.65 per cent, easing pressure on stocks and other long-duration investments. Lower yields support equity valuations by reducing the discount rate applied to future earnings, and they signal the bond market is pricing in a less aggressive Federal Reserve. According to data from CME Group, traders now see only a 35 per cent chance that the Fed will raise the federal funds rate at its September meeting, down from roughly 50 per cent two days earlier. Any increase would be the first in more than three years and would likely anger President Donald Trump, who has consistently lobbied for lower interest rates. The sharp repricing of rate expectations is arguably the most important takeaway for investors: the central bank may have room to wait, and the market is increasingly betting it will.