The Dividend Cafe Tuesday - August 12, 2025
Aug 12, 2025
A significant market rally on August 12 has investors buzzing, with major indices climbing sharply. Recent CPI data hints at stable inflation, bolstering hopes for interest rate cuts from the Federal Reserve. Predictions for the Jackson Hole symposium and the upcoming non-farm payroll report are generating excitement. With recession odds dropping below 20%, there's newfound optimism among small businesses. It's a time of positive economic signals, raising questions about future financial trends.
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Broad Market Rally Led By Small Caps
- Markets rallied strongly on August 12th with broad gains across indices and small caps leading the move.
- Small-cap strength suggested rate-sensitivity drove much of the day's outperformance.
Stable CPI Opens Door To Rate Cuts
- July CPI came in roughly inline with expectations, signaling inflation is no longer accelerating.
- That stability in inflation opened the door for the Fed to consider cutting rates.
Monitor Fed Signals Around Jackson Hole
- Watch Federal Reserve communications, especially Jackson Hole, for guidance on the timing of rate cuts.
- Anticipate the Fed to lower rates if inflation averages near 2.5% over the next 12 months.