Global markets are ending the week on a cautiously optimistic note, with equities edging higher, the U.S. dollar softening slightly, and bonds stabilizing after a volatile stretch. However, underlying the apparent calm is a market still grappling with mixed macro signals, persistent geopolitical uncertainties, and shifting expectations around central bank policy.

Equities: Resilient Despite Uncertainty

U.S. equity futures are pointing modestly higher in early Friday trade, with S&P 500 futures (ES) up 0.3%. This comes after a week of relatively muted volatility but resilient underlying risk sentiment. Investors appear to be pricing in a “soft landing” scenario where inflation continues to cool gradually without severely impairing growth.

The gains in equities come amid ongoing rotation beneath the surface—tech and AI-adjacent names remain in focus, but there’s renewed interest in cyclical sectors, particularly financials and industrials. While earnings season is tapering off, sentiment has been buoyed by stronger-than-expected corporate results, particularly among large-cap names, helping to anchor broader indices.

Currency Markets: Dollar Slightly Weaker as Risk Appetite Holds

The U.S. dollar is modestly weaker heading into the weekend, though the move is subtle. The euro and the British pound are both holding key levels—EUR/USD is hovering near 1.12 and GBP/USD around 1.33. These levels have served as technical pivot points amid an absence of major new data from the eurozone or UK this week.

Dollar softness seems less about domestic weakness and more a reflection of stable risk appetite and improving external growth narratives. Emerging markets have also seen mild inflows, aided by the USD’s recent loss of upward momentum and a rebound in commodity-linked currencies.

Fixed Income: Bonds Firmer, But Still Choppy

Government bond markets have seen a firmer tone to close out the week, but this follows several days of significant intraday swings. U.S. Treasuries, for instance, rallied on weaker-than-expected CPI data midweek, only to give back some gains as market participants recalibrated their Fed rate cut expectations.

Despite the turbulence, yields are roughly flat on the week—a testament to the ongoing tug-of-war between cooling inflation and a still-resilient labor market. Market-implied odds for a September Fed rate cut have nudged higher but remain far from certain, leaving investors in “data-dependent” mode.

Commodities: Crude Waits for Clarity, Gold Slips on Lower Hedging Demand

Crude oil prices have traded in a narrow band this week as traders await developments in several key geopolitical hotspots, including the Middle East and Eastern Europe. With no major escalation or resolution in sight, oil remains rangebound, caught between potential supply disruptions and uneven demand data from China and other major consumers.

Meanwhile, gold (XAU) has slipped modestly, reflecting a reduction in safe-haven flows. With equity markets firm and the dollar only marginally weaker, investors are showing less urgency to hedge geopolitical or economic risks via bullion. Still, underlying support remains intact, with central bank demand and retail ETF inflows providing a floor for now.

Event Risks and Macro Themes

Next week, attention will shift toward key macro data releases, including U.S. retail sales and initial jobless claims, as well as commentary from several Federal Reserve officials. The market’s base case remains for no hike in the near term, but futures pricing suggests growing conviction around a policy shift later in the year.

Geopolitical developments—particularly around oil-producing regions—could introduce fresh volatility, while technical levels in both the dollar and yields will be closely monitored for signs of a broader breakout or reversal.