Powell's speech overnight "poured cold water" on expectations of a sharp rate cut!

Highlights of Powell's speech:

* Reiterated confidence that inflation will continue to move toward the Fed's 2% target, adding that economic conditions "lay the foundation" for further easing price pressures.

* Looking ahead, if economic trends are roughly in line with expectations, policy will gradually shift to a more neutral stance.

* The forecasts released at the same time as the September interest rate decision indicate that the Fed will cut interest rates by 25 basis points in each of the next two meetings (November and December).

* The committee is not in a hurry to cut interest rates quickly and will ultimately be guided by the data received. If the economy slows more than we expect, then we can cut interest rates faster. If the speed is slower than we expect, we can slow down.

After Powell's speech overnight, the market lowered its expectations for rate cuts next year, and the market believes that the Fed is more likely to cut interest rates by 25 basis points in November rather than 50 basis points.

Powell placed more emphasis on the labor market in his speech, so Friday's non-farm data becomes more important: if the number of new jobs exceeds 150,000, the probability of a 50 basis point rate cut in November will decrease, while if it is close to 100,000 or lower, it will prompt the Fed to cut interest rates by another 50 basis points.