World Street | Fed minutes fuel rate cut hopes, oil runs hot, Microsoft to test 'Recall', and more

World Street offers sneak peak into top global news developments

Here’s your global roundup: Rate cut optimism sparks a relief rally in markets, boosting oil demand as economic activity is likely to rev up, while US bond yields take a dip. Catch all this and more in the August 22 edition of World Street—don’t miss out!

Rate cuts in the offing

At their July meeting, Federal Reserve officials signaled a growing likelihood of an interest rate reduction, although they refrained from making the cut at that time. The minutes released on August 21 revealed that the majority of participants agreed that if economic data continued to align with expectations, it would likely be appropriate to ease policy at the next meeting in September. Markets are already fully pricing in this anticipated cut, which would be the first since the emergency measures taken during the early days of the Covid crisis.

Jackson Hole eyed to map Fed's next move

Investors responded positively to the latest results, with the S&P 500 and Nasdaq Composite logging their 9th winning session in the last 10. Meanwhile, the Dow notched its 6th positive day in the past seven sessions. As attention shifts to Fed Chair Jerome Powell's upcoming speech at the Jackson Hole Economic Symposium on August 23, traders are eager for more clarity on future rate policy. According to the CME Group’s FedWatch tool, there is a 100 percent expectation of a rate cut next month, though opinions differ on the size of the reduction.

Bond yields softening

The US 10-year Treasury yield fell overnight following the release of minutes from the latest Federal Reserve meeting, which indicated that the central bank was nearing a rate cut. The 10-year Treasury yield declined by over 2 basis points to 3.7 percent, while the 2-year Treasury yield dropped by about 7 basis points to 3.9 percent.

Asian markets steady

Asia-Pacific markets traded mostly higher this morning as investors monitored flash business activity data from Australia, Japan, and India. The Bank of Korea kept its benchmark interest rate steady at 3.5 percent, in line with expectations, though traders are closely watching the press release for any hints of potential policy easing. Japan’s Nikkei 225 gained 1.03 percent, with the broader Topix up 0.32 percent. South Korea’s Kospi saw a slight increase, while Hong Kong’s Hang Seng index rose by 0.35 percent.

Rate cut to bolster oil demand?

The sharp sell-off in crude oil took a breather this morning as expectations of a Federal Reserve rate cut helped counterbalance weak economic data from the US and China. Brent crude futures edged up to $76.08 a barrel, while US WTI crude futures slipped to $71.88.

Ford's EV strategy shift

Ford Motor announced that it is delaying the production of its next-generation all-electric pickup truck at a new plant in Tennessee and canceling plans for a three-row electric SUV. Instead, the company will focus on developing hybrid models and electric commercial vehicles. This shift in strategy includes the introduction of a new electric commercial van in 2026, followed by two electric pickup trucks in 2027.

'Recall' your online activities

Microsoft announced that it will begin allowing Windows users to test its controversial Recall artificial intelligence search feature starting in October. Recall captures screenshots of on-screen activity, enabling users to search for information they viewed earlier. However, security researchers have raised concerns about the potential risks of Windows automatically capturing images without user consent. Microsoft first demonstrated this feature in May on a new class of Windows PCs, designed by various device makers to handle AI workloads.

Tariff dispute

The Chinese government criticised the European Union over its decision to impose tariffs on electric vehicle imports, following the bloc's reduction of duties on several major electric automakers, including Tesla. A spokesperson from China's Ministry of Commerce expressed concerns, stating that Beijing believes the EU's investigation into Chinese subsidies for its electric vehicle industry has been driven by "pre-set conclusions" and accused the EU of promoting unfair competition.

(with inputs from Reuters and other agencies)