Overview

• Futures imply a roughly 96% probability of a 25 basis point reduction on Sept. 17 with only slim odds on a larger move, according to CME FedWatch.
• Markets have priced roughly 67 to 70 basis points of total cuts by year-end, putting a premium on Chair Jerome Powell’s remarks and the new rate projections.
• The policy backdrop features a weakening labor market and an inflation pickup tied to tariffs, with CPI running near 2.9% despite stronger-than-expected retail sales.
• Governance questions eased for this meeting after Stephen Miran was sworn in and a federal appeals court blocked the effort to fire Governor Lisa Cook, though independence concerns linger.
• Positioning shows the dollar near multi-year lows versus the euro, U.S. stocks hovering just off record highs, and gold at fresh records as investors anticipate a dovish path.