Risk sentiment and equity markets soared Tuesday and into Wednesday in a relief trade after US consumer price figures largely matched expectations and did not show as much of the dreaded tariff effects as investors feared. The US Treasury yield curve steepened, meaning short-term interest rates fell relative to longer rates, as investors see a 25 basis point rate cut as baked in the cake and a 50 basis point cut as a possibility for September.

Meanwhile, the dollar took a hit on Tuesday from the outlook for lower US rates after the CPI report. The dollar suffered further from two pieces of news from the Trump administration and that remains the focus on Wednesday on a relatively light day for scheduled macro news. First, President Trump's threat to sue Fed Chair Jerome Powell over his handling of renovations at the Fed buildings in Washington, D.C., part of the president's effort to force Powell out early and bring monetary policy under his control. Second, news that the president's choice to head the Bureau of Labor Statistics, E.J. Antoni, had said he favored pausing monthly jobs reports and issuing the report on a quarterly basis while the BLS reworks its methodology. Any such change in the BLS practices would be an enormous disruption for financial markets and Fed policy-makers who count on the monthly jobs report and who rely on the BLS as a nonpartisan source of accurate information. Antoni made the comments in an interview with Fox News Digital on Aug. 4, well before his appointment to head the BLS, but his more recent comments suggest that plan is likely. Antoni is well-known as a partisan supporter of the president's policy agenda.

The dollar and appetite for US assets generally would take another huge hit if the Trump administration proceeds with either of these threats. Institutional investors, already inclined to scale back allocations to US assets in response to worries about Trump's tariff plans, are likely to accelerate their shift out of dollar-based assets in response to either step.

Market Focus details key factors in the coming day that will impact the economic outlook and the financial markets. These include central bank events, economic indicators, policymaker speeches as well as expected political and corporate developments.

Keeping up-to-date with event schedules and the economic calendar is key to understanding the global financial system. Econoday's Market Focus allows investors and policymakers to carefully track what will be making news and moving the financial markets in the coming day.