Asian Stocks to Gain as US CPI Fuels Fed Cut Bets: Markets Wrap
Equity-index futures showed benchmarks in Tokyo, Hong Kong and Sydney will all open higher. US indexes climbed more than 1%, with the S&P 500 and the Nasdaq 100 hitting all-time highs. While an initial rally in Treasuries faded, money markets priced in an about 90% chance of a Fed reduction next month. Two-year yields, more sensitive to imminent policy moves, slid four basis points to 3.73%. The dollar fell.
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CNBC
2 minutes ago
- CNBC
Wall Street goes full risk-on mode after favorable inflation report. But something is off with this latest run-up
The stock market is going full tilt into risk after the latest inflation report. But not everybody is optimistic. The S & P 500 reached an all-time high on Tuesday after the cooler consumer price index report from July sounded the all clear for the Federal Reserve to cut in September. On Wednesday, more investors were buzzing about the possibility of an ultra big cut next month of a half-percentage point — adding to the positive mood on Wall Street. Yet, some investors are only getting more skittish as the market continues to run higher. They're worried that stocks are priced for perfection , with the S & P 500 currently trading at a 12-month forward multiple of 22 — making it vulnerable to some sort of setback. "I think this is an area to watch for a pause," Warren Pies, co-founder at 3Fourteen Research, told CNBC's " Closing Bell " on Tuesday. "You have to recognize that trees don't grow to the sky. These things pause." .SPX YTD mountain SPX year to date Pies, who recently moved to market weight from overweight, said the macroeconomic picture continues to trouble him, including cracks in the labor market that he worries traders aren't giving enough credence. CPI, while softer than expected, nevertheless showed a reacceleration, he noted on social media. "If you're a client of ours and you follow our advice, I think you want to just neutralize your overweight, and let the market come to you," Pies said. Some strategists on Wall Street think the many divergences within the market — between large caps and small caps, or value versus growth — make parts of the asset universe ripe for a comeback if the interest rate outlook improves, while limiting upside for others. On Wednesday, for example, the S & P 500 rose 0.2%, while the small-cap Russell 2000 advanced 0.9%. Health care, the worst performing sector this year, led the index. Apple rose, while Nvidia slid. Yet, the top-heavy nature of the market raises other concerns. "Magnificent Seven" stocks, which account for roughly one-third of the S & P 500 in terms of market cap, are trading a premium to the rest of the market, even as the equal-weighted benchmark remains off its record. Goldman Sachs pointed out on Monday that the median stock in the benchmark remains more than 10% off its recent highs. "This is consistent with our view that these [Mag 7 stocks] are mania candidates," read a Wednesday note from David Abramson, chief U.S. strategist at Alpine Macro. "But with valuations already high, this could play out as a mania-like overshoot, 'catch up' of laggards, or a burst bubble."
Forbes
2 minutes ago
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5 Key Student Loan Repayment Updates As Defaults Rise, Backlogs Grow
Federal student loan borrowers are struggling as the repayment system remains mired in turmoil. Hundreds of thousands of applications for repayment plans and student loan forgiveness programs remain stuck in backlogs. At the same time, huge changes imposed by the courts, the Trump administration, and Congress are reshaping the landscape for borrowers and making it more confusing than ever to figure out what their options are. The result of this confluence of events is a surge in student loan delinquencies. According to the Federal Reserve Bank of New York, student loan delinquency rates have steadily risen this year. 'In the second quarter of 2025, 10.2% of aggregate student debt was reported as 90+ days delinquent,' said the bank in its quarterly report released this month. 'Transition into early delinquency held steady for nearly all debt types; the exception was for student loans, which saw another uptick in the rate at which balances went from current to delinquent," although the bank noted that this uptick was also related to the resumption of credit reporting following a nearly five-year pause. Nevertheless, the Department of Education has acknowledged the fact that millions of borrowers are falling behind on their student loan payments. And the Trump administration anticipates that student loan default rates could double by the end of this year. 'More than 5 million borrowers have not made a monthly payment in over 360 days and sit in default—many for more than 7 years—and 4 million borrowers are in late-stage delinquency (91-180 days),' said the department in a statement in April. 'As a result, there could be almost 10 million borrowers in default in a few months. When this happens, almost 25 percent of the federal student loan portfolio will be in default.' Here are the latest updates for student loan borrowers struggling with repayment and loan forgiveness, and what they should know. Student Loan Interest Resumes For SAVE Plan Borrowers One of the biggest recent changes impacting the federal student loan system is the resumption of interest charges for borrowers in the SAVE plan forbearance. For more than a year, borrowers who selected SAVE (an income-driven repayment program launched by the Biden administration in 2023) have been in an involuntary administrative forbearance, which paused payments and interest. The forced forbearance is the result of a court injunction that blocks the program following a legal challenge brought by a coalition of Republican-led states. The Trump administration justified the restarting of interest accrual by pointing to a recent court ruling in the ongoing SAVE plan litigation. But critics point out that nothing in that court decision explicitly required the department to resume interest. Regardless, many borrowers who have been stuck in the SAVE plan forbearance now feel pressure to apply to switch to a different repayment plan, given that interest is accruing again as of August 1 and the forbearance period still doesn't count toward student loan forgiveness for income-driven repayment plans or Public Service Loan Forgiveness, or PSLF. Backlogs And Denials For Student Loan Borrowers Applying To Switch Plans But student loan borrowers applying to switch to a different repayment plan are encountering a different problem: a massive backlog of applications. According to a court filing submitted by the Department of Education last month, more than 1.5 million applications remain in the queue, and many borrowers have been waiting months for a decision. To make matters worse, the department indicated that it would be denying nearly a third of these outstanding applications (close to 500,000) as soon as this month. Specifically, borrowers who used an earlier version of the IDR application and selected either SAVE (which remains blocked) or the option to allow their loan servicer to pick the most affordable repayment plan option will be rejected. These borrowers will then have to reapply for an income-driven plan using an updated version of the application, essentially adding themselves back to the queue. If there's any good news here, it's that borrowers who apply (or reapply) for an income-driven repayment plan online at and consent to using the newly restored IRS data retrieval tool to import their income data directly from their federal tax return, should experience relatively fast processing, potentially within a few weeks or so. 'Providing consent eliminates much of the time-consuming work of filling out an application,' says Department of Education guidance. 'By electronically importing your financial information, you ensure your application has the most up-to-date data. Plus, having your consent on file means your IDR plan will be automatically recertified each year, if eligible.' Student Loan Forgiveness Under IBR Remains Paused Historically, borrowers who repay their student loans under an income-driven repayment plan would be able to qualify for student loan forgiveness for any remaining balance after 20 or 25 years in repayment, depending on the plan. But loan forgiveness under the SAVE, ICR, and PAYE plans has been blocked for much of this year following a court order in the ongoing SAVE plan litigation saga. All three of these plans were created through the same underlying federal statute, and the authority to provide student loan forgiveness under that statute is now being scrutinized. 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Many borrowers who have applied for PSLF Buyback, a program that allows for a lump-sum payment to cover periods of otherwise non-qualifying forbearance periods so that they can count toward student loan forgiveness, have been stuck in a massive and growing backlog. According to Department of Education data, Federal Student Aid staff have been successfully processing two to three thousand PSLF Buyback applications per month, but the application backlog has nevertheless skyrocketed from around 49,000 in April to more than 65,000 in June. Many borrowers have been waiting months for determinations. Meanwhile, the Trump administration is moving forward with steps to impose new rules on the PSLF program that would restrict student loan forgiveness for entire organizations if they engage in what the administration refers to as 'substantial illegal activity.' Critics have argued that this loosely-defined term could be used to weaponize PSLF by punishing nonprofit organizations and Democratic state and local governments simply for engaging in activities that run afoul of Trump administration policy goals. The regulations are still under development and shouldn't be implemented until next summer; many observers expect there to be legal challenges. Big Changes Coming To Student Loan Repayment Under Big, Beautiful Bill As if these issues aren't enough, President Trump signed legislation passed by Congress in July that will make substantial changes to the federal student loan repayment system. These reforms may put additional strain on an already-buckling Department of Education, which was hit by mass layoffs earlier this spring that effectively cut the department's workforce in half and likely has contributed to the existing backlogs. Under the student loan provisions of the so-called 'Big, Beautiful Bill,' IBR would be preserved for current borrowers. But the ICR, PAYE, and SAVE plans will all get phased out by July 2028, if not sooner. And any borrower who consolidate their federal student loans, or takes out a new federal loan, on or after July 1, 2026 would be cut off from IBR and would only be able to access the Repayment Assistance Plan, a new income-driven option that will force borrowers to remain in repayment for 30 years before they can qualify for student loan forgiveness. A major student loan advocacy organization has warned that RAP could be a debt trap for many borrowers.
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2 minutes ago
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Wells Fargo Warns Latin America FX Rally to Reverse by Year-End
A rally in Latin American currencies has made them expensive while increasing their vulnerability to political risk and a rebound in the US dollar, according to Wells Fargo. The region's currencies have soared this year, part of a broad emerging markets rally buoyed by the dollar's steady decline. But further dollar weakness is unlikely to last in the near term, as sticky US inflation limits the Federal Reserve's capacity to cut interest rates, according to Aroop Chatterjee, a macro strategist at the bank. His forecasts for Latin American currencies are among the most pessimistic in median estimates tracked by Bloomberg.
