Key points
- JPMorgan brought its first Fed rate cut forward to September, citing softer labor data and shifting policy risks.
- The bank’s U.S. team (led by Michael Feroli) expects a 25 bp cut in September and says more easing could follow.
- The call follows a weak July jobs report: +73,000 payrolls, unemployment at 4.2%, and sizable downward revisions.
What JPMorgan is saying
JPMorgan has shifted its base case for the Federal Reserve’s first rate cut to the September 16–17 FOMC meeting, pulling the call forward from December. The bank expects a quarter-point move to kick off an easing cycle, arguing the balance of risks has swung toward supporting growth as labor-market momentum fades.
Market commentary and other coverage echo the change: probability gauges tied to Fed policy have swung decisively toward a September cut, and JPMorgan’s economists suggest additional 25 bp steps are plausible if incoming data keep cooling.
Why the call moved up: the data
The July employment report showed payroll growth slowing to 73,000 with the unemployment rate at 4.2%, and earlier months were revised down substantially—evidence the jobs engine is losing steam. That combination typically raises the Fed’s sensitivity to downside risks, especially after a long hold at restrictive settings.
What it means for markets and the economy
- Rates & bonds: A September cut would likely anchor the front end lower and could steepen the Treasury curve if investors price a faster growth impulse later on.
- Credit & equities: Easing financial conditions may cushion profits and funding costs, but much depends on how quickly labor and spending stabilize.
- The dollar & commodities: A dovish pivot often weighs on the dollar at the margin; commodity reaction will hinge on global growth expectations and policy headlines.
What to watch next
- August CPI/PCE and the August jobs report (due before the September meeting) — either could firm or soften the case for a front-loaded cut.
- FOMC guidance and dissents — signs of a broader consensus versus a split committee will matter for the path beyond September.
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