"Markets are fully committed to a Fed rate cut this month, with CME data showing investors have priced a 0% chance of a hold as weak labor figures and softer inflation drive dovish bets. Economists like Deutsche Bank's Jim Reid and UBS's Paul Donovan cautioned that while headline data supports easing, the details reveal more mixed pressures that Powell will need to weigh."
"The first is the labor market, which is looking considerably weaker than previously thought. A gamut of figures has painted this picture, from slowing hiring (payrolls added just 22,000 jobs last month) to a significant downward revision in roles last year (-911,000 less than previously stated). This means the FOMC's attention may be forced back to the maximum employment side of its mandate, forcing it to relinquish some of its grip over stable pricing and inflation at 2%."
Markets are pricing a Fed rate cut this month, with CME data indicating a 0% chance the Fed will hold. Weak labor indicators, including payrolls adding just 22,000 jobs and a large downward revision to prior employment figures, have increased conviction for easing. Producer Price Index data showed demand edged down 0.1% in August while core PPI rose 0.3%, marking a fourth consecutive increase. Economists warn that headline improvements mask mixed underlying pressures that the Fed must weigh. According to CME Group's FedWatch, 92% of analysts were banking on a 25 basis point cut.
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