Markets are bracing for the Fed’s rate decision with a 25 bps cut nearly priced in. While U.S. yields trended lower recently, a surprise jump in retail sales—driven by back-to-school spending and pre-tariff stocking—temporarily lifted yields. The Atlanta Fed’s GDPNow model now sees Q3 growth at 3.4%, reflecting strong private capex and consumption fueled by excess short-term liquidity. With the Treasury General Account (TGA) hitting its mission-critical $800 billion level, reserves are expected to flow into the real economy, supporting growth but adding volatility across risk assets.
- Retail sales: Strong August print drives upward revisions to Q3 growth.
- Fed in focus: 25 bps cut expected; independence concerns linger.
- Liquidity flows: TGA at $800B signals reserves re-entering the economy.
- Metals split: Gold retraces while silver remains volatile but bullish.