U.S. stocks fell, gold fell, U.S. Treasury bonds fell, and only the dollar rose—behind this familiar scene is a familiar recipe—the market's bets on the Federal Reserve cutting interest rates have weakened.
Last night, three regional Fed presidents spoke, dampening the market's enthusiasm.
Around 19:00, Kansas City Fed President Schmidt stated that there seems to be no need to rush into a rate cut at this time. The increase in tariffs will raise the risk of inflation rising before the end of the year, and the current inflation risk is greater than the risk of problems in the labor market.
Around 20:00, Atlanta Fed President Bostic stated that he still expects one rate cut this year (while the market expects two), and in today's environment, any point forecast or outlook judgment comes with a large confidence interval.
Around 24:00, Cleveland Fed President Harmack stated that if a decision were to be made tomorrow, she would not support a rate cut.
The timing of the speeches by the three officials spanned before and after the U.S. stock market opened, continuously making statements with similar views; this is not a coincidence but a deliberate arrangement of 'expectation management', especially since Schmidt was interviewed by CNBC as the first speaker. The market originally believed there was an 80% chance of a rate cut in September, but last night it was directly reduced to 65%, and finally returned to around 70%.
Powell will give a speech tonight at 22:00, and last night the 'New Federal Reserve News Agency' suddenly published an article about Powell's life: Powell told colleagues that he does not feel overwhelmed by pressure. At 72, he still maintains the best condition of his life, swimming three times a week and training with a personal coach. This method of health maintenance helps relieve stress, although he sometimes wakes up in the middle of the night.
This is a psychological war: even though there are strong winds and waves outside, the Fed Chairman remains calm.