On long car rides, the kids in the back seat ask their parents, “Are we there yet?” Investors have been asking the same question about the Fed’s 2.0% inflation target. The answer is we aren’t there yet, but we're close.
At his Jackson Hole speech at the end of next week, Fed Chair Jerome Powell is likely to confirm that. The question is whether he will signal a 25bps or 50bps rate cut in September. We are leaning toward the smaller cut. But that will mostly depend on August’s employment report, which will be released on September 6. We expect that it will be strong, reversing most of July’s weather-related weakness.
