Inflation isn’t cooling fast enough to relax Fed fears, housing may be stirring from its slump, and OPEN’s dramatic stock reversal reminds us this cycle is built for volatility.
Inflation Slightly Warmer… Cutting Rates Isn’t Debated, It’s Quantified
August’s CPI report showed inflation climbing to 2.9% YoY, up from 2.7% in July, with core inflation steady at 3.1% . Monthly inflation also rose around +0.4% seasonally adjusted… enough to stoke the embers of rate-cut caution, but not pull the emergency brake.
100% chance of a Fed Cut next week… but 7.5% chance of 50bps vs 25bps.
What this means: the Fed has essentially told the market that a cut in September is almost baked in… the question no longer is if, but how much and how confident they are going forward. With inflation sticky in certain sectors like food and shelter, there’s enough discomfort that the Fed can’t fire off aggressive cuts, but the easing undercurrent is clearly gaining momentum. FOMC is next week!
With that being …