The Federal Reserve’s Daly expressed that a substantial rate cut next month does not appear necessary. She mentioned concerns that such a move might convey an undue sense of urgency regarding the labour market’s strength.<\/p>\n
Daly emphasised a preference for a gradual transition to a more neutral interest rate setting over the next year. She indicated that there is no current need to hasten adjustments based on existing data.<\/p>\n
The stance suggests a steady approach rather than a quick shift in monetary policy. There is no indication from current data that would justify a significant rate cut at this time.<\/p>\n
It seems a large 50 basis point rate cut for September is now off the table. Before this, derivative markets, like the CME FedWatch tool, were pricing in nearly a 40% chance of such an aggressive move. We see this as a clear signal that the Federal Reserve feels no urgency to act boldly.<\/p>\n
Frankly, the economic data doesn’t justify a panic move. We just saw the July 2025 jobs report add a steady 195,000 positions, keeping unemployment stable at 3.8%. With the latest core inflation reading now hovering at 2.4%, the numbers simply don’t scream “emergency.”<\/p>\n
This points toward a strategy of selling volatility in the weeks ahead. A “gradual” path telegraphs the Fed’s moves, which is the enemy of market uncertainty and big price swings. This is a very different environment from the wild swings we saw back in 2022 and 2023 when policy was far less predictable.<\/p>\n
Traders should therefore re-evaluate positions that were betting on deep cuts. The focus will likely shift to pricing in a single, standard 25 basis point cut in September, or perhaps even a pause. Expect adjustments in Fed Funds futures and options on SOFR to reflect this more cautious reality.<\/p>\n
For equity options, this outlook dampens the case for explosive upside moves driven by aggressive easing. Strategies that benefit from a steady, grinding market, rather than a volatile one, seem more appropriate now. We believe a slow and steady policy path provides a stable floor for the market.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Daly favors gradual interest rate adjustments, seeing no need for a substantial cut based on current data.<\/p>\n","protected":false},"author":62,"featured_media":17021,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-29057","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/29057","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=29057"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/29057\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/17021"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=29057"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=29057"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=29057"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}