Three hours remain until the highly anticipated speech by Powell. Tonight at 10 PM is destined to be an exciting battlefield, and the most noteworthy aspect for us to pay attention to is the outlook on monetary policy. Will there be a rate cut in September? The Federal Reserve is quite divided internally.
What will Powell mainly talk about? Let me make a prediction:
1: It revolves around the outlook on monetary policy, specifically whether there will be a rate cut in September, by how much, and is there a possibility of a rate hike? Of course, the probability of a rate hike is zero. Four Federal Reserve governors have already spoken; Goolsbee mentioned that the latest inflation data is not ideal, implying that there will be no rate cut. Another governor stated that the deterioration of the labor market could lead to a short-term rate cut. Two other governors, Harmack and Cleveland, are firmly opposed to a rate cut. From the statements of these four governors, it seems likely that Powell will take a hawkish stance tonight.
2: He will definitely address structural factors in the labor market. The previous non-farm payroll data was significantly revised, influenced by the labor market, and was directly forced to consider a rate cut.
In summary, Powell will set a tone for whether there will be a rate cut in September tonight, with a hawkish to dovish speech. Market fluctuations are expected to be intense, so manage your positions accordingly.
