Analyst: Waller Revives September Rate Hike Possibility, Key Data to Watch is Non-Farm Payrolls and CPI

On August 29, StoneX market analyst Fawad Razaqzada stated that Waller's speech on Friday evening was perceived as quite hawkish. Waller conveyed what the market expected him to say regarding forward guidance, indicating that he does not believe in forward guidance and thus refused to commit to a September rate hike in advance. However, this did not prevent the market from speculating that a rate hike might indeed be back on the table. Regarding inflation, Waller emphasized that combating inflation remains a clear priority and elaborated on this point, though he also added that he is confident that core inflation is moving towards the Federal Reserve's target. Overall, his remarks were more hawkish than the market had anticipated. During Waller's speech at Jackson Hole, the market significantly repriced the likelihood of a September Federal Reserve decision, with the probability of a 25 basis point rate hike jumping from 30% to about 50%. Before the September Federal Reserve meeting, a non-farm payroll report and a CPI inflation report will be released, along with some minor data. Under the new chair's leadership, the Federal Reserve has become more data-dependent. Given that the recent U.S. employment reports have consistently fallen short of expectations by a significant margin, any further signs of weakness could severely undermine market expectations for a September rate hike. (Jin Shi)