Powell in the Hot Seat: Weak Jobs Data Sparks Wall Street’s September Rate Cut Frenzy

Jerome Powell just got handed a flaming economic data sandwich—and Wall Street's already betting he'll take a bite.

The Fed's rock-and-a-hard-place moment

Friday's dismal jobs report has traders pricing in near-certain rate cuts by September. The numbers were so bad they'd make a central banker sweat through their bespoke suit.

Market's playing Fed whisperer

Futures markets now show an 85% implied probability of at least 25bps cut at the September FOMC meeting. Because nothing says 'confidence' like algorithmic traders front-running monetary policy.

The cynical take

Meanwhile, hedge funds are quietly stacking leveraged long positions—because when hasn't 'bad news is good news' worked for the last 15 years?

Markets bet on a rate cut as Fed’s credibility takes a hit

Immediately after the report, traders jumped into action. CME’s FedWatch showed 75.5% odds of a rate cut at the next Fed meeting in September, up from 40% just 24 hours before. Kalshi traders echoed the same sentiment, pricing in 75% odds that Powell and crew will fold and ease.

Powell literally told reporters 2 days ago that the labor market was still “strong.” That quote didn’t even make it a full news cycle before looking ridiculous. The data landed and said otherwise. Loudly.

There are now only two ways to interpret this: either the job market is actually slipping into a recession, or the BLS data is so messed up that it’s missing a quarter million jobs over just two months. Neither is good. One means economic pain. The other means no one knows what’s really happening.

Bonds didn’t wait around to analyze. The two-year yield dropped 15 basis points to 3.80%, and the 10-year moved down 8 basis points. That kind of MOVE screams “pivot incoming.”

So now, the idea of a September cut is no longer a “maybe.” It’s being priced in like a done deal. And Powell’s attempts earlier this week to cool down expectations just got steamrolled by raw numbers.

Meanwhile, as always, TRUMP is slamming the Fed publicly again, calling for an immediate cut. On Truth, he said “Too Little, Too Late. Jerome “Too Late” Powell is a disaster. DROP THE RATE! The good news is that Tariffs are bringing Billions of Dollars into the USA!”

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