based on the materials of the portal - By CoinoMedia

Investor sentiment has shifted significantly: market data now indicates a 75% probability of an interest rate cut by the Fed in September. This marks a notable increase in expectations compared to the situation just a few weeks ago, when the probability was closer to 50%. Traders are reacting to a combination of economic indicators suggesting a decline in inflation, a slowdown in employment growth, and weakening consumer demand.

Analysts believe this shift reflects growing confidence that the Federal Reserve will abandon its tight monetary policy. If inflation continues to decline and economic data continues to worsen, the Fed may be forced to take action to prevent a 'hard landing.'

What drives expectations for a rate cut?
Several factors are fueling expectations for a rate cut:

Slowing inflation: recent data on the CPI and personal consumption expenditures indicate a weakening of inflationary pressures. This reduces the need for the Fed to maintain high rates. Softening labor market: the number of unemployment claims has slightly increased, and employment growth has slowed, signaling potential issues in the labor market.
Global uncertainty: concerns about a slowing Chinese economy and geopolitical tensions are also prompting the Fed to act cautiously.
Markets are now pricing in this scenario more aggressively, with bond yields falling and stocks showing renewed volatility.

However, investors should remain cautious. A premature rate cut could also signal deeper economic problems, potentially scaring the markets rather than calming them.


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