50 Bps Rate Cut Odds Surge as Labor Market Cools

Fed's Next Move: Half-Point Cut Gains Traction

Labor data shifts expectations—traders now pricing in aggressive easing

Market whispers turn to shouts as employment indicators soften. The probability of a 50 basis point reduction just skyrocketed, flipping conventional wisdom on its head. Street analysts scramble to adjust forecasts while futures markets price in the dovish pivot.

Powell's Put Back in Play?

The Fed might finally throw markets a bone—because nothing says 'stable economy' like emergency-level cuts during modest slowdowns. Wall Street's addiction to cheap money continues unabated, proving once again that fundamentals matter less than Fed generosity.

Watch the dot plot vanish into irrelevance as reality forces the Committee's hand. Another reminder that forward guidance lasts only until the data doesn't cooperate.

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CME’s odds seem to seal a deal for a rate cut, with chances of the federal funds rate staying unchanged at 0%, down from 3.6% yesterday and 13.6% a week ago.

Nonfarm Payrolls Add to Labor Market Concerns

The Fed is more incentivized to cut rates with a slowing labor market because lower borrowing rates can stimulate economic growth and hiring. August’s nonfarm payrolls showed 22,000 new jobs, badly missing the estimate of 75,000 additions. Furthermore, July and June’s jobs count was lowered by a combined 21,000 jobs, with June ending up at a loss of 13,000 jobs. That ends a 53-month streak of monthly payroll gains.

The three months ended August have now averaged 29,000 new jobs per month, the lowest rate since the Covid pandemic.