Fed officials and data keep signaling Wall Street won’t get continued cuts

For most of the year 2025, investors were wandering after multiple discounts in interest rates from Jerome Powell and the FOMC Open Market Committee, knowing that they would take advantage of the cheapest borrowing and enhance economic activity. The general consensus was that once the Federal Reserve was confident enough to start the pieces, it would clarify a change in the weather: move towards the highly expected “normalization” of the money rate.

So when FOMC was reduced in September, this clear fact was not baked by the markets, but the cuts were expected to come for the rest of the year.

Unfortunately, the economy is much better than many estimates – however, the Federal Reserve may not be forced to do more at the expected speed.

The markets continued in the struggle yesterday-the third day in a row-with Jim Red from Deutsche Bank, noting: “The main catalyst was a strong set of US data, which means that investors demand their expectations for the FBI’s rapid reserve rate discounts, and cabinet factors pushed the front end higher.

This summarizes non -intuitive position traders: when healthy economic data actually works against analysts and investors. The data this week must have reassured them: the unemployed demands decreased to 218,000 for the week ending September 20, and the increase in GDP by a rate of 3.8 % for the second quarter of 2025, according to a third estimate of the Economic Analysis Office.

With the softening of the labor market (the economy added less than 30,000 jobs according to the latest data), analysts had hoped that this federal reserve would continue to continue cutting. But with an increase in inflation – the other side of the federal reserve bank – is 3 % high (before its target by 2 %), giving the federal reserve a sufficient reason to stay cautious.

“It is not surprising that every hint of enthusiasm nutrition is facing. But two facts about the return curve – and the broader rate environment – deserve to be taken into consideration,” said Kevin Khang, chief international economist in Vangard, wrote in a note seen this week.

First, the short end of the currency will continue by delegating the double federal reserve to ensure the stability of prices and the maximum sustainable workers. Although inflation has decreased useful from its peak, it is still sticky. This is partly due to the forces of the show side, including identification definitions and the slow immigration. ”

“At the same time, the labor market, although it shows signs of softening, is still balanced according to historical standards. These dynamics indicate that the FBI’s path to sustainable price cuts. With inflation is preparing to stay higher than its 2 % goal for the fifth year in a row soon.”

The longest opinion

Without deterrence from the data indicating the opposite, investors continued to reduce another in October. According to CME’s Fedwatch Barometter, investors are still screaming at a chance of 87.7 % to reduce 25 -bit per second at the October meeting.

In fact, FOMC members indicated that although additional cuts could come, anything that goes beyond the meeting approach to the meeting would be a mistake. Mary Dali, head of the Federal Reserve Bank in San Francisco, said in a speech on Wednesday: “Moving forward, it is possible that more policy amendments are needed as we are working to restore the stability of prices while providing the necessary support to the labor market … but these expectations, not promises, and make good decisions that will require us to focus on our goals, evaluate the essays, evaluate, repeatedly,

This constant, which president Jay Powell, who won the title “is too late”, approached the oval office, with the permission of his caution in mitigating. But in his speech in Rod Island this week, Powell adhered to his scalp approach: “Our policy is not in a prior path. We will continue to determine the appropriate position based on the data received, advanced expectations, and the balance of risk. We are still committed to supporting the maximum employment and bringing inflation in a sustainable way to our 2 percent goal.”

“Our success in achieving these goals is important for all Americans. We understand that our actions affect societies, families and companies throughout the country.”

Below is a snapshot of markets before the opening bell in New York this morning:

• S & P 500 futures contracts It was flat this morning. The index closed 0.5 % at its last session.
• Stoxx Europe 600 0.31 % increased in early trading.
• FTSE 100 in the United Kingdom An increase of 0.37 % in early trading.
• Japan Nikki 225 It was a decrease of 0.87 %.
• China CSI 300 It was 0.6 %.
• South Korea Cuban It was a decrease of 2.45 %.
• Elegant India 50 0.91 % decreased before the end of the session.
• Bitcoin She refused to 109.7 thousand dollars.

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