Narrative remains bullish
Markets leaned dovish after Jerome Powell’s latest speech, as the Federal Reserve (Fed) Chair refused to commit to a rate cut at next month’s meeting. Powell highlighted the downside risks to the jobs market and the upside risks to inflation, painting a mixed picture that calls for careful adjustment. Still, bond markets reacted with lower yields and traders now price a 94% chance of an October cut.
Equities pulled back from record highs, but the underlying story hasn’t changed: the Fed is easing into a resilient economy, corporate earnings remain strong and inflation is sticky but manageable. In Europe, PMIs...