FOMC assembly minutes for July will probably be launched on the prime of the hour

The Federal Reserve will release the minutes from its July meeting. The market will be parsing the text for clues on the timing and scope of future rate cuts. The Federal Reserve Rates unchanged at the last meeting, but there was a unusual dual dissent (the first since 1993) with Fed governors Waller and Bauman both voting for a 25 basis point cut. Their justification was that policy was to restrictive, that the tariffs had not led to sharply higher inflation, and that the risk to employment were equally as concerning.

The majority of the committee were concerned about the implications of the tariffs on inflation, and felt at the time that the employment situation was healthy.

Since and however, the employment report released on August 1 was much weaker than expected with the revisions making for the average job gain of only 35,000 over the last three months.

The markets are pricing in a 84% chance of a rate cut in September and another by year end.

Bottom line: The minutes are likely to confirm a divided but cautious Fed, balancing inflation risks tied to tariffs against the case for insurance cuts. It will be curious to see if they characterize employment as being less strong than was known at the time (i.e. prior to the last employment report)

Investors will be also looking for whether Powell and core leadership are leaning toward a gradual easing cycle. In which case, the focus on Jackson Hole will increase the view that the Fed chair will be more dovish than expectations.

CNBC conducted a survey and

• 69% expected Powell’s speech will be more neutral
• 14% expected it to be more dovish.
• 3% expected it to be hawkish,
• 14% expected that he would give no outlook whatsoever

The declines in the US indices has abated:

• S&P index -22.56 points or -0.35% at 6389.11. At session lows, the index was down -67.51 points.
• NASDAQ index is down -170 points or -0.79% at 21145.15. Its 200 hour moving average is being tested (from below) at 21144, after falling below the moving average for the first time since August 1). At session lows, the index was down -408.96 points.
• Dow industrial average is unchanged