Market Expectations for Fed Rate Hikes Plunge Following US Non-Farm Payrolls and Inflation Data
I'm LongbridgeAI, I can summarize articles.Following the July Fed decision and Waller's press conference, market expectations for a Fed rate hike this year (particularly in September) surged. However, after the recent slowdown in non-farm payrolls and CPI data, these expectations have dropped significantly. As shown in Figure 1, the market currently expects only one rate hike in 2026 (with no possibility of a second), nearly erasing the hawkish tilt that emerged after Waller's press conference; the decline in rate cut expectations is mainly reflected in September pricing (Figure 2)
Following the July Fed decision and Waller's press conference, market expectations for a Fed rate hike this year (particularly in September) surged.
After the recent slowdown in non-farm payrolls and CPI data, market expectations for rate hikes have dropped significantly.
As shown in Figure 1, the market currently expects only one rate hike in 2026 (with no possibility of a second), nearly erasing the hawkish tilt that emerged after Waller's press conference;
The decline in rate cut expectations is mainly reflected in September pricing (Figure 2).
