It’s going to be kind of a synthetic Sunday today as we don’t have anything on the agenda. The main event of the week is the US CPI report tomorrow, so we might see the market either consolidating ahead of the release or keep following the trend set by the dovish Fedspeak.
Over the weekend, we had Fed’s Bowman supporting three rate cuts by year-end and she even added that more weakness in the labour market could call for a bigger rate cut. The recent Fedspeak suggests that a rate cut in September might be unavoidable, we might need very hot inflation data to change their mind (and of course a good NFP report in September).
They don’t have the guts to look through some labour market weakness at this point. Therefore, the CPI tomorrow might need to come in higher than expected to change the market pricing and then it will be a matter of focusing on Fedspeak and Powell’s speech at the Jackson Hole Symposium to see whether they are still on board for a cut in September.
