News & Insights

The Dow and S&P 500 both hit new all-time highs on Thursday to potentially round out another month of equity gains. At the same time, the yield curve seems less optimistic about future prospects for the economy, widening to 63 basis points; creating the steepest curve since April.

Markets were expecting a hawkish tone from Fed Chair Jerome Powell prior to his speech at the Jackson Hole Symposium. Futures were pricing in a 90% probability for a cut as recently as Monday, falling to about 71% this morning. Then Powell gave markets want they wanted to hear.

Markets considered Tuesday’s CPI report benign enough for the FOMC to cut rates by at least 50 basis points for the remainder of the year. President Trump’s global tariff policies officially took effect last week and there’s still one more government jobs report and one more CPI report before the next FOMC meeting, offering time for the committee to amass more data to inform their next decision.

The labor market took a turn this week after August kicked off with a government jobs report that came back well-below expectations. The jobs report included a downward revision of prior months’ totals by 258,000 and an increase in the unemployment rate.