Will Fed cut rates in response to market bets on softening job market?

Big news out of Jackson Hole today 👀 Fed Chair Jerome Powell hinted the Fed could cut rates as soon as September. Markets loved it—stocks rallied, bond yields fell, and the dollar got a bump. Key points: Powell is signaling flexibility but moving cautiously. The Fed quietly tweaked its framework, putting more balance between jobs & inflation. Political pressure is heating up, with Trump openly criticizing Powell. Bottom line: The Fed may be ready to pivot, but it’s trying not to look rushed. The next few weeks will be telling. September could mark the beginning of a new policy phase.

This week all eyes are on Wednesday’s Fed decision. The Fed is expected to cut rates by 25 bps (or possibly even 50), but the real story isn’t the cut itself… it’s the Fed dots that show what could happen in the months ahead. If the dots confirm that this is the first of several cuts, markets will cheer. However, if the Fed signals a one-and-done, that’s a surprise negative and volatility could spike fast. Bottom line: It’s not just the cut that matters, but what it signifies about the next few months. #RateCut #Markets #InterestRates #Investing

💡 Why do markets sometimes crash when the Fed cuts rates? At first glance, lower interest rates should be bullish. Cheaper money, easier credit, higher valuations. But history tells a more complicated story: 📉 2001 – The Fed started cutting as the dot-com bubble burst. Stocks kept falling. 📉 2008 – Aggressive cuts during the financial crisis didn’t stop the selloff. 📉 March 2020 – Emergency cuts to zero only triggered panic selling and sent the VIX above 80. 📉 Dec 2024 – A 25 bps cut came with “hawkish” guidance. Markets dropped nearly 3% in a single day, and volatility spiked ~74%. So what’s going on? 🔑 Rate cuts are a signal. Emergency cuts = confirmation something is very wrong. Small cuts with hawkish guidance = “policy won’t cushion the slowdown.” When positioning is stretched, even good news can turn into a “sell the news” event. ✅ The context matters more than the cut itself. When cuts are seen as proactive “insurance” (e.g., 2007, Nov 2024), markets rally. When they confirm crisis or disappointment (2008, 2020, Dec 2024), markets sell off. 👉 Next time the Fed cuts, don’t just watch the basis points — watch the narrative behind the move.

With a September rate cut all but certain, this week’s CPI report could be key in shaping what the Fed does next. Join CIO Gene Goldman on this week’s episode of #TheWeekAhead as he breaks down the Fed’s dual mandate, what recent labor market weakness means for policy, and how inflation data could impact future rate cut expectations. https://lnkd.in/gA_hFjx3

With a September rate cut all but certain, this week’s CPI report could be key in shaping what the Fed does next. Join CIO Gene Goldman on this week’s episode of #TheWeekAhead as he breaks down the Fed’s dual mandate, what recent labor market weakness means for policy, and how inflation data could impact future rate cut expectations. https://lnkd.in/e9HvDRed

Wall Street will be focused on Fed Chair Jerome Powell’s speech Friday morning at the central bank’s annual confab in Jackson Hole, Wyoming. The stakes are high, with traders speculating that weakening jobs growth could open the door to a more dovish stance. But the risk is Powell stays tight-lipped after a string of hot inflation prints. https://lnkd.in/e6ESw9rC The Fed’s Jackson Hole symposium usually isn’t a big catalyst for the stock market unless there are big shifts in monetary policy. Since 2000, the S&P 500 has climbed 0.4% on average in the week following the gathering, data compiled by Gillian Wolff, CFA at Bloomberg Intelligence show. That said, Powell has used the occasion to make some market-moving policy pronouncements in recent years. Last year, for example, he said “the time has come” for the central bank to begin lowering rates, which sent the S&P 500 rallying over 1% that day. And in 2022, he warned that the Fed would need to keep monetary policy restrictive to battle inflation, sending stocks plunging 3.4% that day and down another 3.3% in the week following.

Jackson Hole awaits Fed Chair Powell's address. Will weakening jobs data signal a shift in monetary policy, or will persistent inflation keep Powell hawkish? Historically, this event's market impact varies, but Powell's past pronouncements have moved markets significantly. Traders are keenly watching for clues. #FederalReserve #JacksonHole #MarketAnalysis

The Fed Is Going To Cut – Long Live The Bull Market The Fed is likely to cut rates in September, and history shows cuts near market highs and after long pauses have overwhelmingly fueled further gains. In this short video, Sonu Varghese, Ph.D. and I break down why the bull market $SPY / $QQQ may have plenty left in the tank.