On August 23, Federal Reserve Chairman Powell stated that the continuously "changing" economic risks provide the Federal Reserve with a stronger justification for interest rate cuts.
This statement indicates that Powell has aligned with the "dovish" camp within the Federal Open Market Committee responsible for setting interest rates, and it signals that he may support a 25 basis point rate cut at the Federal Reserve's next meeting in September.
The probability of a 25 basis point rate cut in September has risen to 85.2% (the probability before Powell's speech was about 75%), while the probability of keeping rates unchanged is 14.8%.
This is the main reason for yesterday's surge! Old Powell finally relented, and the positive news directly fueled the market's dramatic rise!
Before the rate cut, there will be some speculation, and once the rate cut begins, the positive impact will lead to another pullback, and the market will start waiting for the next rate cut speculation!