Rate hike odds are collapsing — fast. September probability just dropped to 40.1% on CME FedWatch, down from 48.4% yesterday and 67% a week ago. That's a massive shift in sentiment.
The trigger? July's jobs report came in brutal. Nonfarm payrolls dropped 23,000 — the third-largest monthly job loss since the pandemic. And wage growth? Just 3.2% over the trailing 12 months while inflation sits at 3.5%. Wages aren't even keeping up with prices. That's a problem.
Three FOMC members pushed for a hike at the last meeting. That was before this jobs data hit the table. Now the doves have their strongest argument in months — the labor market is cooling, and it's cooling hard.
Next inflection point: August CPI drops August 12. If inflation runs hot, this rate hike probability could reverse fast. If it stays soft, we're cementing a dovish pivot. Either way, volatility is coming.
From a trading lens, this is a setup for risk-on if CPI confirms the cooling trend. Watch $BTC and equities — both love a dovish Fed narrative. But if CPI surprises hot, we could see a sharp reversal. Stay nimble, watch the data, and don't get caught leaning too hard one way before August 12.
The trigger? July's jobs report came in brutal. Nonfarm payrolls dropped 23,000 — the third-largest monthly job loss since the pandemic. And wage growth? Just 3.2% over the trailing 12 months while inflation sits at 3.5%. Wages aren't even keeping up with prices. That's a problem.
Three FOMC members pushed for a hike at the last meeting. That was before this jobs data hit the table. Now the doves have their strongest argument in months — the labor market is cooling, and it's cooling hard.
Next inflection point: August CPI drops August 12. If inflation runs hot, this rate hike probability could reverse fast. If it stays soft, we're cementing a dovish pivot. Either way, volatility is coming.
From a trading lens, this is a setup for risk-on if CPI confirms the cooling trend. Watch $BTC and equities — both love a dovish Fed narrative. But if CPI surprises hot, we could see a sharp reversal. Stay nimble, watch the data, and don't get caught leaning too hard one way before August 12.