Will Fed Cut Rates in September? Market Odds Jump Over 90%

Traders are placing heavy bets on a Federal Reserve rate cut in September, with market odds surging past 90%. Weak job data, mounting political pressure, and subtle policy shifts from the Fed have fueled this sentiment. The CME FedWatch Tool now shows an 88% probability for a September cut, down slightly from a recent peak of 94%.

The outlook for 2025 has shifted dramatically, with odds of three rate cuts next year jumping to 50%—up from just 20% a week ago. This rapid repricing signals a potential policy pivot, injecting liquidity into risk assets. Goldman Sachs echoes this sentiment, projecting three 25-basis-point cuts in 2025, likely starting in September.

San Francisco Fed President Mary Daly suggests two cuts this year may suffice but remains open to more if labor markets deteriorate further. Markets are already pricing in three cuts by year-end, setting the stage for a potential Q4 rally across speculative assets.