Strong U.S. Data Dampens Rate-Cut Expectations, Wall Street Logs Three-Day Losing Streak

Market Overview

U.S. equities extended their decline for a third straight session yesterday, marking the longest losing streak in a month. Stronger-than-expected GDP growth, coupled with a drop in initial jobless claims, clouded expectations for a potential Fed rate cut in October. Markets have now erased all the post-FOMC gains since September. Treasury yields climbed across the curve, with the policy-sensitive 2-year yield rising 4.5 basis points.

In FX, the U.S. Dollar Index advanced for the second consecutive day, hitting a three-week high, while USD/JPY moved closer to the key 150 level. Cryptocurrencies were hit hard—Bitcoin dropped 3.62% below $110,000, while Ethereum plunged more than 7% to a seven-week low. By contrast, commodities outperformed: spot gold rebounded 0.38%, silver surged past $45 to a 14-year high, and crude oil staged a sharp V-shaped reversal to finish higher.

Hot Topics to Watch

● Crypto Crash Deepens

The crypto market came under severe pressure. Ethereum slid over 7% intraday to $3,823, its lowest level in seven weeks. Bitcoin fell 3.62% below the $110,000 threshold, while Solana dropped 7.2%, marking six straight sessions of losses. Nearly 250,000 traders were liquidated, with total losses exceeding $1.1 billion. Over $1.7 billion in long positions were force-liquidated, as institutional outflows amplified selling pressure. Analysts warn that a break below $3,800 in Ethereum could trigger a larger wave of forced liquidations.

● U.S. GDP Revised Higher

Second-quarter U.S. GDP was sharply revised upward to an annualized 3.8%, from a previously reported 3.3%. This marks the strongest expansion since Q3 2023, when growth hit 4.7%. The revision was driven primarily by stronger consumer spending and lower imports. However, the data also suggested that inflationary pressures remain more persistent than previously estimated.

Key Events Ahead (GMT+8)

• 20:30 – U.S. Core PCE Price Index (Aug, YoY/MoM), U.S. Personal Spending (Aug, MoM)

• 21:00 – Richmond Fed President Thomas Barkin (2027 FOMC voter) speaks

• 22:00 – University of Michigan Consumer Sentiment Final (Sep), 1-Year Inflation Expectations Final (Sep), Fed Governor Michelle Bowman speaks

• 01:00 (Overnight) – Fed Governor Bowman participates in a discussion on monetary policy decision-making frameworks