Last week brought a series of positive developments. Earnings were generally solid, with strong results from banks and some of the key technology companies. Economic data also supported the soft-landing narrative, with solid retail sales and a drop in jobless claims. On the geopolitical front, China announced more stimulus, and Israel’s assurance of avoiding escalation in Iran helped ease tensions.

This positive momentum was fueled by mixed economic data: unchanged wholesale inflation (PPI) signals potential progress in controlling price increases, while hotter-than-expected inflation data (CPI) earlier in the week kept uncertainty alive around the Federal Reserve’s future rate decisions. A negative jobless claims report was shrugged off as “temporary” due to recent storms and strikes, and investor sentiment remained upbeat, with all major indices posting weekly gains.

While the odds favored the 50-bps cut, many were still thinking we’d only get 25-bps. The message to the markets was clear, the Fed does not want to fall behind the curve and hurt growth. “Soft Landing” hopes were reinvigorated, and money flowed into risk assets as can be seen in the grid.

While the odds favored the 50-bps cut, many were still thinking we’d only get 25-bps. The message to the markets was clear, the Fed does not want to fall behind the curve and hurt growth. “Soft Landing” hopes were reinvigorated, and money flowed into risk assets as can be seen in the grid.

Rather “firm” CPI and PPI reports last week were largely offset by the “Fed Whisperer” and better-than-expected guidance from giants Oracle and Nvidia.