Expectations for rate cuts decline significantly before Powell's speech at Jackson Hole

Interest Rate Cut Expectations: The likelihood of a U.S. Federal Reserve interest rate cut in September has decreased from 99% to 71.5% following recent inflation data and comments from Fed officials.

Inflation Concerns: Kansas City Fed President Jeffrey Schmid and Cleveland Fed President Beth Hammack expressed concerns about persistent inflation, indicating that it remains above the Fed's 2% target and suggesting caution regarding rate cuts.

Market Reactions: Despite the drop in rate cut expectations, traders are closely monitoring Fed Chair Jerome Powell's upcoming speech at Jackson Hole for any hints about future monetary policy.

Economic Outlook: Goldman Sachs economist Jan Hatzius anticipates that Powell will not definitively signal a rate cut but may indicate support for one, emphasizing the need for careful consideration of economic risks.