The Federal Reserve will hold its monetary policy meeting on September 15–16, and market expectations for another rate hike are rising. Following the Jackson Hole symposium, interest rate markets have significantly adjusted their pricing upward; the upcoming U.S. employment and inflation data will directly influence market sentiment ahead of the September meeting.
The probability of an interest rate hike has been significantly revised upward.
Market pricing shows that the probability of a September rate hike has risen from approximately 33% to around 66%, and has since stabilized near 64%. The prediction market Kalshi currently indicates a roughly 55% chance of a 25-basis-point hike and a roughly 46% chance of holding rates steady.
Former Federal Reserve Chairman Kevin Warsh previously stated at Jackson Hole that an unemployment rate of 4.1% and jobless claims near historic lows indicate that current interest rates could remain elevated or even be raised further.
This week's employment data is the focus.
This week’s JOLTS job openings and ADP private employment data will provide early clues on whether the labor market is cooling. More importantly, the non-farm payrolls and unemployment rate data released on Friday will be one of the most critical short-term variables ahead of the September Fed meeting.
If employment data remains strong, market expectations for rate hikes could further intensify. If the data shows a clear weakening, the case for rate hikes will be undermined. The PPI and CPI data to be released next week will also continue to influence interest rate expectations ahead of the meeting.
Institutional opinions are diverging
Economist Steve Hanke holds a more aggressive view on rate hikes, suggesting the probability of a September rate increase is close to 80%. He noted that at the previous meeting, three Federal Open Market Committee members supported a rate hike; if more officials shift toward a hawkish stance, the outcome could lean even further toward tightening.
However, Wellington-Altus’s analysis suggests that another rate hike may not be necessary. The firm notes that recent price pressures may stem more from supply shocks than from a resurgence in demand. If rising costs do not persistently translate into higher wages, broad-based prices, or inflation expectations, inflation may not enter a new sustained upward cycle.
Bitcoin is in a period of directional selection.
Tom Lee, co-founder of Fundstrat, said that if the Federal Reserve ultimately holds steady, the S&P 500 could see an upside surprise, with the September FOMC meeting viewed as a near-term turning point. Risk assets are currently in a wait-and-see mode, awaiting data and policy signals.
The crypto market remains cautious. Bitcoin is currently trading between $76,000 and $80,000, with short-term support near $76,000 and major resistance around $80,000. Ethereum is near $2,400, and Solana is near $100; the next directional move will depend on whether Bitcoin can reignite overall risk appetite.