Investors are counted in the decision of monetary policy of September 17 of the Federal Reserve; The markets expect a drop in the rate of a quarter of points which could trigger short -term volatility but potentially fuel the gains in the longer term between risk assets.
The economic backdrop highlights the delicate balance of the Fed.
According to the latest IPC report published Thursday by the American Labor Statistics Bureau, consumer prices increased by 0.4% in August, lifting the annual IPC rate to 2.9% against 2.7% in July, because shelter, food and gasoline pushed costs. The basic IPC has also climbed 0.3%, extending its stable pace from the past few months.
Producers’ prices have told a similar story: according to the latest PPI report published Wednesday, the PPI index of the head slipped by 0.1% in August, but remained 2.6% higher than a year earlier, while the basic PPI increased by 2.8%, the greatest annual increase since March. Together, the reports underline the obstinate inflationary pressure even if growth slows down.
The job market has still softened.
The non -agitated wage bill increased by 22,000 people in August, the federal government and the loss of use of the energy sector compensating for the modest health care gains. Unemployment maintained at 4.3%, while participation in the active population remained blocked at 62.3%.
Revisions have shown that the employment growth in June and July was lower than that initially reported, strengthening the signs of the cooling momentum. Average hourly income has further increased by 3.7% from one year to the next, now the pressure on wages alive.
The bond markets have been adjusted accordingly. According to Marketwatch data, the 2 -year treasure yield is 3.56%, while the 10 years is 4.07%, leaving the curve modestly reversed. Term merchants see 93% of a reduction of 25 base points, according to CME Fedwatch.
If the Fed limits its decision to only 25 base points, investors can react with an answer “buy the rumor, sell the news” because the markets have already made a price in relief.
Actions test the registration levels.
The S&P 500 ended Friday to 6,584 on Friday after having increased by 1.6% for the week, its best since early August. The one -month table of the index shows a strong rebound in its decline at the end of August, stressing the bullish feeling before the Fed week.
The Nasdaq Composite also won five consecutive records, ending at 22,141, powered by gains in Megacap technical actions, while the DOW slipped below 46,000 but has always reserved a weekly advance.
Crypto and raw materials have rallied.
Bitcoin is traded at $ 115,234, below its highest August 144,000, but still firmly higher in 2025, with the world market capitalization of $ 4.14 billions of dollars.
Gold has increased $ 3,643 per ounce, near record vertices, with its one month table showing regular rise, because investors are the price of lower real yields and are looking for hedges of inflation.
The previous history supports cautious optimism.
The analysis of the letter from Kobeissi – reported in a X thread published on Saturday – citing Carson Research, shows that in 20 of the 20 previous cases since 1980, where the Fed reduced the rates of 2% of the peaks of all time S&P 500, the index was higher a year later, with an average of earnings of almost 14%.
The shorter term is less predictable: in 11 of these 22 cases, the actions dropped within the month following the reduction. Kobeissi maintains that this time could follow a similar scheme – the initial turbulence followed by gains in the longer term, because relief of the rate amplifies the momentum behind assets such as actions, bitcoin and gold.
The wider configuration explains why merchants are looking closely at the announcement of September 17.
Reduction rates while inflation is higher and shares hover in files may work in credibility, but staying on hold could scare markets that already have a price to end. Be that as it may, the Fed’s message on growth, inflation and its policy prospects will likely shape the market trajectory for the coming months.
