Powell has really been having a tough time lately, getting criticized by Trump every day. 😂 The market is already anxious enough, and the president is still complaining that he hasn't cut interest rates directly to zero. You have to remember, after the pandemic, it was hard to finally get things back on track, and Trump was not only imposing tariffs on the whole world but also publicly humiliating Powell. In the end, this guy held on tough, very professional, and still executed the Fed's directives. However, I think Powell might actually be the only right choice Trump made. That being said, he is set to speak at the annual meeting in Wyoming this Friday, and everyone is watching to see if he will pour cold water on things. Currently, the market pricing is: 80% chance of a 25bp rate cut in September 3% chance of a 50bp rate cut 17% chance of no rate cut This is similar to when I was arbitraging the price difference of STG/ZRO: 25bp=0.80 ⇒ mainstream expected price 0bp=0.17 ⇒ risk premium In other words, the market almost assumes there will be a rate cut, but still leaves a 17% chance of no cut. This premium reflects investors' concerns that Powell might pour cold water on the situation during his speech, reminding everyone not to take a rate cut for granted. Considering inflation and employment: CPI is basically in line with expectations PPI is above expectations (production-side pressures are still there) Employment data is weakening (increasing the case for a rate cut) This creates a tug-of-war: Weak employment → supports rate cuts Stubborn inflation → prevents aggressive rate cuts So, the likely scenario is that Powell won't directly deny a September rate cut, but will use wording to remind not to be overly optimistic, suggesting that he will only consider a small cut of 25bp, rather than the 50bp that a minority in the market desires.