Daily Market Outlook, August 15, 2025
Patrick Munnelly, Partner: Market Strategy, Tickmill Group
Munnelly’s Macro Minute…
Treasuries saw a slight increase, recovering from losses caused by a higher than expected US inflation report, prompting traders to reduce their expectations for an interest rate cut by the Federal Reserve in the upcoming month. Yields across the board rose slightly, with the two-year note yield down one basis point at 3.72%. The dollar weakened, while the yen strengthened against most Group-of-10 currencies. Gold prices climbed, along with an index tracking Asian stocks. Oil prices remained stable as investors prepared for the upcoming summit between the US and Russian presidents in Alaska on Friday. Futures for the S&P 500 increased by 0.2%, and European stock futures rose by 0.4%. In Hong Kong, stocks dropped by 1.2% following data indicating a slow down in China's economy in July, with disappointing factory activity and retail sales, implying that Donald Trump’s trade war is starting to impact the world’s second largest economy. Conversely, Japanese stocks gained 1% after the country's economy showed stronger growth than anticipated last quarter. Risk appetite had been lifted in past days due to expectations of monetary easing in the US, with traders fully anticipating a quarter-point cut. However, following a significant increase in US wholesale inflation in July—marking the fastest rise in three years—traders reduced the likelihood of a September rate cut to about 90%, down from previously assuming it was a certainty. The unexpected rise in the US producer price index, indicating that companies are passing on high import costs affected by tariffs, curtailed the rally in Treasuries and caught investors off guard. Traders had been anticipating a September rate cut, with some speculating on a substantial 50-basis-point reduction, driven by a mostly calm consumer price report earlier this week and statements from Treasury Secretary Scott Bessent, who suggested that policymakers might lower borrowing costs by as much as 1.5 percentage points. The release of July's Producer Price Index (PPI) data delivered a significant upside surprise, partially countering the bond market's relief earlier in the week following the lack of shocks in the Consumer Price Index (CPI). At the final demand level, producer prices surged 0.9% month-over-month, far exceeding the consensus forecast of 0.2%. On an annual basis, this translates to a sharp rise of 3.3%, up from 2.3% in June. A wide range of categories contributed to this price strength, but a notable driver was the robust margins achieved by retailers and wholesalers. Margins jumped 2% month-over-month, marking the strongest increase in over three years. This suggests that traders are increasingly confident in passing tariff-related cost pressures downstream, with the effects likely to manifest in CPI data soon. Such evidence complicates the case for a rate cut in September, particularly for moderate FOMC voters, despite market expectations leaning heavily toward this outcome and ongoing pressure from Trump and Bessent. Additionally, some of these PPI components feed directly into the PCE inflation data set for release on August 29, potentially amplifying consumer price inflation further.
Overnight Headlines
Trump Admin Said To Discuss US Taking Stake In Intel
Buffett Buys $1.6B Stake In UnitedHealth, Sells T-Mobile
HSBC Plans Major Global Expansion, Staff Surveillance, Docs Show
RBNZ To Cut Cash Rate By 25bps To 3% On Aug 20, Poll Shows
Taiwan To Revise Growth Outlook For First Time Since US Levies
Applied Materials Sinks 10% On Light Forecast Amid Uncertainties
Japan Q2 GDP Expands Annualised 1.0% Despite Tariff Headwinds
China Retail Sales, Factory Growth Slump In Blow To Economy
Corporate Japan Girds For $23B Profit Hit From Trump Tariffs
China Warns Foreign Firms Against Stockpiling Rare Earths
Hong Kong Dollar Bounces From Weak End After HKMA Moves
NZ Sees Most Citizens Leave Since 2012 As Economy Cools
Hedge Funds Double Down On Big Tech Amid AI Boom
Online Retailer Shein’s UK Revenue Grew 32% In 2024
FX Options Expiries For 10am New York Cut
(1BLN+ represents larger expiries, more magnetic when trading within daily ATR)
EUR/USD:1.1600-05 (1.3BLN), 1.1625-30 (950M),1.1650 (1.5BLN)
1.1675 (1.4BLN), 1.1700 (1BLN), 1.1725 (340M), 1.1750-60 (1.7BLN)
USD/CHF: 0.8000 (300M), 0.8045 (755M)
EUR/CHF: 0.9350 (250M), 0.9450 (200M)
EUR/GBP: 0.8600 (233M), 0.8620-25 (667M)
GBP/USD: 1.3500 (325M), 1.3520 (664M), 1.3610 (205M)
AUD/USD: 0.6490-0.6500 (666M), 0.6525 (883M). NZD/USD: 0.5930 (237M)
USD/CAD: 1.3745-60 (625M), 1.3850-60 (1.1BLN), 1.38775 (338M)
USD/JPY: 146.00 (408M), 146.50 (670M), 147.00 (592M), 148.00-10 (648M)
CFTC Positions as of the Week Ending August 8
Equity fund speculators have reduced their net short position in S&P 500 CME by 40,918 contracts, bringing the total to 322,114. Meanwhile, equity fund managers have decreased their net long position in S&P 500 CME by 29,005 contracts, now totaling 840,636.
Speculators have also raised their net short position in CBOT US 5-year Treasury futures by 24,994 contracts to 2,536,877. For CBOT US 10-year Treasury futures, the net short position increased by 63,204 contracts, reaching 959,834. Similarly, the net short position in CBOT US 2-year Treasury futures was elevated by 122,286 contracts to 1,325,523. The CBOT US UltraBond Treasury futures net short position rose by 11,554 contracts, totaling 228,367. Conversely, speculators slightly decreased the net short position in CBOT US Treasury bonds futures by 363 contracts to 110,440.
The net short position for Bitcoin sits at -1,501 contracts. The Swiss franc has a net short position of -27,377 contracts, while the British pound has a net short position of -33,303 contracts. The euro boasts a net long position of 115,959 contracts, and the Japanese yen has a net long position of 82,006 contracts. Speculators have cut their bearish bets on the dollar to the lowest level in four months..
Technical & Trade Views
SP500
Daily VWAP Bullish Above 6440 Target 6500
Weekly VWAP Bearish Above 6300 Target 6150
EURUSD
Daily VWAP Bearish Below 1.17 Target 1.15
Weekly VWAP Bearish Below 1.1640 Target 1.14
GBPUSD
Daily VWAP Bullish above 1.3260 Target 1.34
Weekly VWAP Bearish Below 1.3360 Target 1.3050
USDJPY
Daily VWAP Bearish Below 1.4880 Target 1.45
Weekly VWAP Bearish Below 1.4770 Target 1.45
XAUUSD
Daily VWAP Bearish Below 3380 Target 3320
Weekly VWAP Bullish Above 3350 Target 3600
BTCUSD
Daily VWAP Bearish Above 120k Target 130k
Weekly VWAP Bearish Below 118k Target 110k
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!