Steep Increases Lying Beyond
In a surprise turn of events, the July jobs report did not meet the market's expectations of a stronger economy. The report, which was softer than anticipated, has led to a shift in the market's belief, with a growing expectation for a reduction in interest rates by the Federal Reserve.
The money and bond markets have embraced this narrative, reflecting a strong belief in an upcoming Fed rate cut. The market's expectation is for a rate cut at the Federal Open Market Committee (FOMC) meeting in September.
Despite the pressure from U.S. President Donald Trump for immediate and substantial rate cuts, Federal Reserve Chair Jerome Powell has maintained the Fed's independence. He emphasized that economic criteria would decide any rate cuts, resisting political pressure despite Trump's repeated calls.
However, concerns were voiced by European Central Bank official Olli Rehn about risks from undermining Fed independence. There is no mention of other parties or institutions openly opposing rate cuts.
The expected Fed rate cut is scheduled for the September FOMC meeting, and the market's confidence in this decision is evident in the movements of the money and bond markets. The jobs report for July did not meet the expectations set by the market, fuelling the belief in a rate cut and setting the stage for a potentially significant monetary policy decision in September.
Read also:
- Trade Disputes Escalate: Trump Imposes Tariffs, India Retaliates; threatened boycott ranges from McDonald's, Coca-Cola to iPhones
- Li Auto faces scrutiny after crash test involving i8 model and a truck manufacturer sparks controversy
- Celebrated Title: Cheesemakers Blessed Upon
- Construction and renovation projects in Cham county granted €24.8 million focus on energy efficiency
