Investors are eagerly buying riskier assets across global markets after encouraging U.S. inflation data, a trend that has pushed Wall Street to record highs and driven volatility measures down to their lowest levels for the year.
While concerns remain about President Trump’s tariff plans, traders appear to be focused on the prospect of lower interest rates and their potential to support an already resilient economy.
Markets are currently assigning roughly a 90% probability to a Federal Reserve rate cut by September, and some officials have suggested the possibility of a substantial easing—on the order of 150–175 basis points—if economic conditions warrant it.
Much of the recent optimism stems from strong technology-sector earnings, which have contributed the bulk of S&P 500 profit growth. That robust performance, combined with investor willingness to downplay tariff risks, is helping sustain the rally.
As a result, asset prices across equities and other risk-sensitive markets have climbed, while measures of market stress and expected price swings have diminished. Traders are weighing the implications of continued central bank accommodation against geopolitical and policy uncertainties, but for now the dominant market narrative is one of lower rates supporting further gains.