Wash Hawk Attack: September Rate Hike Odds Soar, NFP and CPI to Play Judge

BlockBeats News, August 29th, StoneX market analyst Fawad Razaqzada stated that Powell's Friday speech was considered quite hawkish. Powell said what the market expected him to say in terms of forward guidance, that is, he does not believe in forward guidance and therefore refused to commit to a rate hike in September. However, this did not stop market speculation that a rate hike may indeed be back on the table.

Regarding inflation, Powell stated that fighting inflation remains a clear priority and elaborated on this point in more detail. However, he also added that he is confident core inflation is moving towards the Fed's target. Overall, his speech was more hawkish than market expectations. During Powell's Jackson Hole speech, the market underwent a significant repricing of the September Fed decision, with the probability of a 25-basis-point rate hike by the Fed surging from 30% to around 50%.

Prior to the September Fed meeting, there will be a Non-Farm Payrolls report and a CPI inflation report, as well as some minor data releases. Under the leadership of the new Chair, the Fed has become more reliant on data. Given that recent US jobs reports have fallen well below expectations and by a significant margin, any further signs of weakness could seriously dampen market expectations of a September rate hike.