Markets are entering the week with a dovish tailwind. From easing inflation pressures to a gold breakout and AI-fueled enterprise spending, the momentum is shifting—and all eyes are now on the Federal Reserve’s upcoming rate decision.
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Here’s a full breakdown of last week’s key developments and what to watch as central banks take center stage.

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Inflation Shows Signs of Cooling, Rate Cuts Back on the Table

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The August inflation data gave the Federal Reserve some breathing room:
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• Core CPI rose 0.3% month-over-month (headline: +0.4%), in line with expectations and showing signs of disinflation across goods and services.
• Producer Price Index (PPI)—a leading indicator of wholesale costs—unexpectedly declined, reinforcing the view that pricing pressures are easing.
• Jobless claims rose, further weakening the labor market narrative.
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This combination of softer inflation and labor data is fueling bets on multiple rate cuts in 2025, with markets pricing in a near-certainty of a Fed rate cut this week, possibly the first since 2022.

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Gold Surges to Record Highs on Softer Macro Signals

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Gold responded to the macro shift with a major technical breakout. The precious metal hit new all-time highs—both in nominal terms and inflation-adjusted dollars.
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With real yields easing and expectations of lower interest rates, gold is regaining momentum as a hedge against uncertainty and fiat debasement. Central bank demand and geopolitical risks are further supporting the move.

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Oracle Ignites AI Infrastructure Trade

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One of the biggest surprises of the week came from Oracle ($ORCL):
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• Headline earnings missed expectations, but the stock surged.
• Oracle raised full-year OCI (cloud infrastructure) guidance to $18 billion.
• It revealed a massive $455 billion backlog, up 359% YoY, driven by four mega AI infrastructure deals.
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This explosive growth validated the AI-driven data center buildout and shifted investor focus to the energy and power constraints underpinning the sector.

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Energy Is the New Bottleneck for AI Infrastructure

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As AI workloads scale, power—not chips—is becoming the limiting factor. Oracle’s energy strategy is drawing attention to:
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• On-site energy generation via fuel cells today
• Long-term nuclear partnerships for stable power supply
• The broader challenge of grid capacity and cooling infrastructure
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These themes are central to the AI trade and are now top-of-mind for infrastructure investors, utilities, and hyperscalers alike.

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NATO Tensions Escalate After Russian Drone Incident

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Geopolitical risks flared up after Russian drones reportedly entered or approached NATO airspace near Poland:
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• Poland scrambled fighter jets, closed a regional airport, and raised air defense alerts.
• NATO vowed to reinforce eastern defenses, with the U.S. affirming its commitment to defend alliance members.
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While the incident didn’t move markets meaningfully, it served as a reminder of tail risks in Europe that could spike volatility if escalated.

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Federal Reserve Meeting Preview: Will the Cut Arrive?

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The Fed’s rate decision on Wednesday is the main event this week.
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• Most traders expect a 25 basis point rate cut—the first since early 2022.
• Betting markets see a 48% chance of three total cuts this year, depending on Powell’s tone and updated projections.
• The Fed’s Summary of Economic Projections (SEP) will be closely watched for changes in the “dot plot” and growth/inflation forecasts.
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This decision will set the tone for the remainder of 2025 across equity, bond, and currency markets.

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Other Central Bank Decisions to Watch

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Several other global central banks are on deck:
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• Bank of Canada is expected to cut rates by 25 bps, responding to weaker labor and wage data.
• Bank of England and Bank of Japan will hold meetings that may hint at diverging policy paths—with Japan still ultra-accommodative and the UK balancing inflation concerns with weak growth.
• Brazil is projected to pause its cutting cycle, while investors await Argentina’s GDP and Brazil’s latest unemployment data.

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Weekly Market Recap (Sept 8–12)

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Major Index Performance:

• S&P 500: +1.6% (best week since early August)
• Nasdaq: +2%
• Dow Jones: +1.1% (first weekly gain in 3 weeks)

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Sector Winners and Losers:

• Outperformers: Tech and consumer discretionary
• Lagging sectors: Materials and healthcare

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Notable Stock Movers:

• Tesla ($TSLA): +7.4% on strong delivery forecasts and investor momentum
• Microsoft ($MSFT): +1.7% after avoiding a major EU antitrust fine

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Key Takeaways

• Inflation is cooling, raising odds of a Fed rate cut this week.
• Gold and AI infrastructure stocks surged, while investors rotated into tech.
• Central banks are in focus, with decisions across North America, Europe, and emerging markets driving policy divergence.