Bonds & Stocks
S&P 500 futures rose 0.1% after the benchmark closed within touching distance of an all-time high. Netflix Inc. climbed more than 1% in premarket trading before paring the gains as Trump raised potential antitrust concerns on the planned takeover of Warner Bros. Discovery Inc. The Federal Reserve is expected to deliver a third consecutive interest-rate cut. The bond market's reaction to the Federal Reserve's interest-rate cuts has been highly unusual, with Treasury yields climbing as the central bank lowers rates. The divergence in the bond market indicates a matter of heated debate, with opinions ranging from a sign of confidence that recession will be averted to a signal that investors are losing confidence in the US's ability to rein in its national debt.
Economy
Unease that inflation remains too high has also caused divisions among Fed officials, in a rift that’s been exacerbated by the lack of fresh data during the shutdown. After this week’s likely cut, money markets are leaning toward two more moves by the end of 2026, down from three signaled barely a week ago. While a resilient economy, seasonal support and catch-up positioning are supporting stocks, key risks still loom for investors, said Daniel Murray, deputy chief investment officer and global head of research at EFG Asset Management. Those include “that the Fed is less dovish than investors currently assume,” Murray said, along with “a delayed tariff impact that sees inflation higher for longer and cracks starting to widen in the labor market.”
World
Thailand launched air strikes on Cambodian military sites after a deadly border skirmish, with the Thai military saying it carried out ground and F16 air operations in self-defense. The Cambodian defense ministry said it didn’t retaliate to the strikes, and denied Thailand’s claims that Cambodian forces had deployed additional troops and long-range weapons. The escalation threatens to collapse a peace accord brokered by the US and Malaysia, and risks derailing US-Thailand trade negotiations ahead of upcoming elections.