✅”We do not seek or welcome further cooling in labour market”
✅”We will do everything we can to support strong labour market”
🤷‍♂️Is this the Powell pivot. This is a very dovish statement.
✅My confidence has grown that inflation is on a sustainable path back to 2%
✅Upside risks to inflation have diminished, downside risks to employment have increased.
🤷‍♂️This might be the Powell signaling “Oh Sh*t” we might have tightened for too long. Now the is the real question is, how bad are the downside risks from here?
✅Inflation now ‘much closer to goal’
✅The labour market is unmistakably cooling
🤷‍♂️Could the large revision of BLS report have have a significant impact on GDP?
✅”The time has come for policy to adjust. The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks.”
🤷‍♂️We are getting rate cuts for sure in September now the only question is will it be 25bps or 50bps? How bad is the real labour market?
✅”We will do everything we can to support a strong labour market as we make further progress toward price stability.”
✅Ample room to respond to risks.
✅Unlikely the labour market will be a source of further inflationary pressure.
🤷‍♂️This is unmistakably Powell stating we are headed into a weakening labour market.
✅The market is now pricing in a 24% chance of 50 bps rate cut.

Upcoming Economic Data

✅ JOLTS September 4^th.
✅ ADP September 5^th.
✅ Non-Farm Payrolls September 6^th.

FOMC Minutes Summary

✅The vast majority of participants indicated that a rate cut would likely be appropriate at the next meeting if data unfolded as expected.
✅Data released to date (July 31^st) was viewed in line with expectations that inflation was heading toward the 2% target.
✅”Several observed that the recent progress on inflation and increases in the unemployment rate had provided a plausible case for reducing the target range 25 basis points at this meeting or that they could have supported such a decision.”
🤷‍♂️The missing component here is growth current Fed estimates are still pointing towards stronger than expected growth 2.4%, although earnings season has highlighted a slowdown in forward projections from the consumer.
✅”Almost all participants remarked that while the incoming data regarding inflation were encouraging, additional information was needed to provide greater confidence that inflation was moving sustainably toward the Committee’s 2 percent objective before it would be appropriate to lower the target range for the federal funds rate.”
✅”A majority of participants remarked that the risks to the employment goal had increased, and many participants noted that the risks to the inflation goal had decreased.”
🤷‍♂️This is very interesting it seems that the Fed may now be leaning towards preserving jobs to keep with their existing mandate.
✅”Many participants noted that reducing policy restraint too late or too little could risk unduly weakening economic activity or employment.
🤷‍♂️This might be the Fed signaling “Oh Sh*t” we might have tightened for too long considering today’s BLS report.
✅”Participants observed solid growth in economic activity, some progress on inflation, and easing conditions in the labor market.
✅They also noted that the recent progress on disinflation was broad-based across major subcomponents of core inflation.
✅Price inflation in June for housing services showed a notable slowing, which participants had been anticipating for some time.
✅Some participants highlighted that recent data corroborated reports from their business contacts that firms’ pricing power was waning, as consumers appeared more sensitive to price increases.
🤷‍♂️This report in line with market expectations for a rate cut in September, there was nothing of surprise.
🤷‍♂️Powell speaks on Friday which should which should be in line with these minutes but should point towards how significant a rate cut is on the table for September.