On Friday, August 22, Fed Chair Powell boosted bets on a September interest rate cut, stating that conditions “may warrant” rate cuts as downside risks build. According to the CME FedWatch Tool, the chances of a monetary policy easing in September rose from 85.4% on August 15 to 87.2% at the time of writing.
However, traders brace for a volatile fortnight. Uncertainties surrounding the Fed’s policy stance beyond September pulled US futures into negative territory. Upcoming US economic indicators could dictate the Fed’s rate path through the fourth quarter.
On Friday, August 29, the US Personal Income and Outlays Report will face scrutiny. While Fed Chair Powell focused on a softening labor market, A hotter PCE print could derail Q4 easing bets and rattle equity momentum. On the other hand, softer numbers may support multiple Fed rate cuts. Friday’s inflation numbers precede the crucial August Jobs Report, due September 5. These two reports will be essential for market sentiment.
Fed Speakers Under the Spotlight Post Powell
Later today, Fed speeches may offer further insights into the timeline for Fed rate cuts. Nick Timiraos, Chief Economics Correspondent at the Wall Street Journal, remarked:
“The debate among central bankers gathered in Wyoming suggests the focus is now shifting beyond the September meeting to whether the Fed will entertain cutting again at either of its final two meetings of the year, in October and December.”
Neil Sethi, Managing Partner at Sethi Associates, remarked on upcoming Fed speeches and the crucial US Jobs Report, stating:
