Soft US economic data leads to expectations of Fed rate cuts, impacting yields and stock market

From Investing.com: 2025-05-16 00:14:00

In the US, the Producer Price Index dropped by 0.5%, the largest decrease in over a year, leading to expectations of two Fed rate cuts by year-end. Retail control group and factory output also fell below forecasts. Treasury yields tumbled as the market priced in more rate cuts. Crude oil prices slumped on news of a potential Iran nuclear deal, while gold bounced off support levels. Despite the economic data, cyclical stocks rallied, and FX markets were driven by technical factors rather than fundamentals.

The US economy showed signs of weakening, with lower-than-expected data pointing to softer demand and the need for potential rate cuts. Crude oil prices dropped as reports of a US-Iran nuclear deal emerged, while gold prices bounced back from multi-week lows. The USD/JPY pair remained steady, driven more by technical factors than traditional drivers like interest rates. With the focus on technical indicators, momentum may shift in the coming days. Japanese economic data may not have a significant impact on the market given the rapidly changing macro environment.



Read more at Investing.com: Crude Oil Cracks, Gold Glitters, USD/JPY Drifts as Soft US Data Hammers Yields