Strategists Turn Bullish on a September Cut After Jackson Hole’s Jobs-First Message

A chorus of Wall Street research shops spent Monday revising playbooks for the fall after Jerome Powell’s Jackson Hole appearance reframed the Fed’s calculus. The new baseline on many desks: the first rate cut arrives in September, provided the data don’t misbehave. It’s not a promise from the central bank, but it’s close enough for markets that were craving a hint about how the next few meetings might unfold.
The logic behind the switch is straightforward. Powell put the labor market’s softening front and center, warning that an economy kept on tight policy for too long risks damaging employment more than necessary. With inflation progress uneven but improving, that risk-management stance gives policymakers room to ease off the brake without declaring “mission accomplished.” For strategists, the nuance matters: this isn’t easing because inflation is conquered; it’s easing to keep the expansion intact while disinflation finishes the job.
Pricing moved quickly to reflect that reading. Futures markets pushed the odds of a September trim into the high-80s, a significant jump from the days before the speech. The dollar, which took a hit on Friday’s dovish tilt, stayed wobbly to start the week. U.S. stock futures cooled after a big rally, but leadership under the surface remained consistent with a lower-rates narrative: longer-duration tech and communications looked sturdier, while cyclicals and defensives traded more by idiosyncratic headlines than macro beta.
That said, Monday’s research notes didn’t all sing the same tune. A handful of macro teams cautioned that investors may be romanticizing rate cuts, ignoring the risk that easier financial conditions could slow the last mile of disinflation. They also argued that services prices—and the policy noise surrounding tariffs—could keep the Fed from delivering as much easing as markets want. Still, the center of gravity moved: more houses now pencil in September, and some add a second step in December if the numbers allow.
From here, the story is all about the tape. The upcoming run of spending and inflation data will either validate the “insurance cut” thesis or put it back on the shelf. A clean sequence—steady consumption, cooler core prices, and a jobs report that signals softer but not broken—would likely lock in the first move. Any upside shock in prices or rehacceleration in payrolls would weaken the case, but Powell’s blueprint preserves flexibility to wait without confusing the market. That’s the essence of this new phase: fewer calendar commitments, more attention to the numbers, and a willingness to adjust course quickly.
For investors, the takeaway is practical. A closer-to-hand rate cut favors balance sheets that benefit from cheaper capital and cash flows that improve when discount rates fall. For households and CFOs, it means starting to plan for a world where financing costs drift lower—gradually, contingently, and only as fast as the data allow. The Fed hasn’t promised September, but Wall Street is increasingly betting it won’t have to wait much longer.