The unemployment rate in the U.S. was published yesterday (4.1%) and for the first time since Nov 2021, it’s above 4%. Although these levels are still considered full employment, and probably healthier from the wage inflation perspective, it puts pressure on the Fed to lower rates, because it might signal an economic deterioration that can be fatal if not addressed on time. And that’s the way investors digested the data yesterday: the odds of a September rate cut have gone up from 64% to 77%. The next FOMC meeting will take place on July 31st. By then, if the follow “the book”, they might include some comments on the prepared remarks about economic slowdown and prepare themselves and the market to act on the next meeting. Since there is no meeting in August, September 18th is now the expected date for the potential first cut.
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