Markets are adjusting their expectations for a potential interest rate cut by the Federal Reserve in September, ahead of Fed Chair Jerome Powell's significant Jackson Hole speech. The likelihood of a 25-basis-point rate cut is currently estimated at 71.5% by Invest, although this figure has dropped from previous highs due to rising unemployment claims. However, other analysts like Ed Yardeni from Seeking Alpha believe the probability is below 50%, driven by ongoing inflation pressures and economic resilience. Reuters suggests an even lower probability of 25%, citing robust manufacturing data that counters earlier labor market weakness signals.

*Key Factors Influencing the Shift:*

- *Unemployment Claims*: A recent surge in unemployment claims has shaken market confidence, leading traders to reassess their expectations for rate cuts.

- *Inflation Pressures*: Persistent inflation and strong economic output are making policymakers cautious, with Yardeni believing the Fed might maintain current rates in September.

- *Manufacturing Performance*: Solid PMI results indicate the economy might be stronger than expected, reducing the urgency for policy easing.

*Market Outlook:*

With the probability of a rate cut ranging between 25% and 70%, the focus is on Powell's upcoming speech and key data releases that could either boost or stall rate-cut momentum. Crypto traders, BTC holders, and DeFi stakeholders should closely watch these developments for potential market impacts ¹.