Will the Fed Cut 50 bps in September? What Soft Jobs and CPI Mean for Rates and Markets

A surprisingly weak August jobs report has reopened a big question for investors: is the Federal Reserve preparing to move faster than expected at the September FOMC meeting? Standard Chartered now argues the answer could be “yes,” upgrading its call to a 50-basis-point reduction after U.S. nonfarm payrolls increased by only 22,000 and the unemployment rate climbed to 4.3%. That combination—plus downward revisions to earlier months—signals a cooler labor market and raises the odds of a front-loaded policy response designed to cushion growth.

Futures markets still imply a conventional outcome. The CME FedWatch distribution coming into the week points to a quarter-point cut as the high-probability scenario, with a smaller—yet nontrivial—tail risk that the Fed opts for a 50-bp adjustment. In practice, that means traders are bracing for two different messages from Chair Jerome Powell on September 18 (after the September 16–17 meeting): either “measured easing” via 25 bps, or a larger “catch-up” cut paired with guidance that subsequent moves will be conditional on inflation. Both options put the spotlight on this week’s data.

The near-term calendar gives the Fed more inputs to triangulate. On Monday, investors will parse the Conference Board’s Employment Trends Index at 10:00 a.m. ET for confirmation that hiring momentum has faded. At 3:00 p.m. ET, July consumer credit arrives, a timely check on revolving balances and lending appetite to households. The New York Fed’s Survey of Consumer Expectations, also due Monday, adds color on inflation psychology, wage growth, and job-finding perceptions—variables that matter for how quickly demand cools without tipping the economy into contraction. The main macro swing factor arrives Thursday with August CPI. Consensus looks for a modest monthly rise and continued moderation in core CPI, but sticky services and tariff-related core-goods pressures are the watch-items that could restrain the Fed from going bigger.

Street forecasts are being re-cut to reflect the softer labor backdrop. Standard Chartered’s 50-bp call leads the hawkish-on-easing camp; other Wall Street banks have shifted toward at least one quarter-point cut in September and another by year-end, having previously assumed a later start or no cuts at all. That repositioning underscores a broader theme: the Fed may be less concerned about overtightening than it was earlier in the summer, with rising unemployment acting as a policy accelerant even as the inflation descent remains unfinished.

Asset prices reflect that balancing act. Long-duration Treasuries trade near multi-month yield lows, equities have a dovish glide path baked in, and gold’s latest rally speaks to a search for portfolio ballast if policy needs to lean harder into growth insurance. For investors, the tactical takeaway is to watch the CPI internals—particularly core services—and the Fed’s forward guidance. A 25-bp cut with accommodative language keeps a gradual path alive; a 50-bp move framed as “front-loaded and conditional” may deliver the same cumulative easing but with different timing and market texture. Either way, the next seven days will define the narrative for rates, risk assets, and the U.S. economy into year-end.