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1h ago

Powell Hint Spurs Rate-Cut Bets as Markets Reprice, Then Pause

Attention turns to PCE inflation, payrolls plus Nvidia’s results to test whether a softer jobs backdrop justifies a policy shift despite tariff‑driven price risks.

A man walks past a screen displaying Japan's Nikkei share average and exchange rate between Japanese yen and U.S. dollar outside a brokerage,in Tokyo, Japan, August 4, 2025. REUTERS/Issei Kato/File Photo
A dealer watches computer monitors near the screens showing the Korea Composite Stock Price Index (KOSPI), left, the foreign exchange rate between U.S. dollar and South Korean won and the Korean Securities Dealers Automated Quotations (KOSDAQ) at a dealing room of Hana Bank in Seoul, South Korea, Monday, Aug. 25, 2025. (AP Photo/Lee Jin-man)
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Overview

  • Jerome Powell said the balance of risks has shifted and that conditions may warrant adjusting policy, opening the door to potential rate cuts.
  • Stocks surged Friday with the S&P 500 up about 1.5% and the Dow up 846 points to a record, while Treasury yields fell to roughly 4.25% on the 10‑year and 3.69% on the two‑year.
  • Market-implied odds of a September cut sit near the mid‑80% range, as Barclays, BNP Paribas and Deutsche Bank now forecast a 25‑basis‑point move.
  • The rally cooled Monday with major U.S. indexes slipping, the dollar firming and yields edging up, even as Asian shares earlier tracked Wall Street higher.
  • Upcoming catalysts include Friday’s PCE inflation reading, next week’s payrolls and Nvidia’s earnings on Wednesday, which investors view as key tests for the Fed outlook and tech valuations.