Fed Meeting Looms: Will Powell Hint at a September Rate Cut Tomorrow?

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Fed Meeting Looms: Will Powell Hint at a September Rate Cut Tomorrow?
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Market Overview Analysis by James Picerno covering: United States 2-Year. Read James Picerno's latest article on Investing.com

convincedis still a wild card, but only by the smallest of margins, according to market sentiment. Indeed, it’s fair to say that the crowd’s super confident that the future is clear.

The embedded forecast has been early, to put it generously, but confidence is high that confirmation is nigh for the dovish pivot forecast.“If they have enough confidence to go in September, then that’s got to make November live as well as December,” predicts Richard Clarida, a former vice chair at the Fed who’s now a senior adviser at the bond manager Pimco.

An animating feature of the view that the Fed needs to cut soon, if not tomorrow, is the Sahm Rule, which signals the start of a recession when it reaches 0.5. The indicator, which summarizes the unemployment trend, has been trending up for much of the past year and rose to 0.4 in June. “This is important because it means the economy is not experiencing the usual vicious circle in which job and income loss lead laid-off workers to reduce their spending, leading to further job loss,” analysts at Goldman Sachs explain.

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