Well, that wasn’t what most people were bracing for. Federal Reserve Chair Jerome Powell, speaking at the Jackson Hole symposium on Friday, took a decidedly different tone than many had anticipated. Instead of the hawkish stance markets were steeling themselves for, he opened the door—quite clearly—to a potential interest rate cut as soon as September.
He pointed to a shifting landscape, suggesting that the balance of risks might be changing. “Downside risks to employment are rising,” Powell noted, adding a note of caution that if those risks do materialize, they could happen fast, leading to a sudden jump in layoffs and unemployment. It’s a signal that the Fed is watching the labor market just as closely as it’s watching inflation, perhaps even more so right now.
Markets React Immediately
The reaction was swift and pretty telling. Almost the moment his remarks hit the wires, things started moving. U.S. stocks jumped, adding more than 1%. The 10-year Treasury yield dipped, falling about six basis points. The dollar lost some ground, and even gold ticked higher. And bitcoin? It gained around 2%, pushing back up toward the $114,200 mark. It’s a classic ‘risk-on’ move, all based on the idea that cheaper money might be on the way.
A Rough Lead-Up to the Speech
But the week leading into this was a different story entirely. There had been a real sense of dread. With expectations for a September cut fading fast—they’d dropped to nearly 69% right before he spoke—markets were under real pressure. Just last week, the mood was almost euphoric. Bitcoin had been flirting with record highs above $124,000, and a September cut seemed almost certain. Then the air came out. Bitcoin slumped nearly 10% from that peak, and it wasn’t alone.
Ether saw an even deeper correction, dropping about 12% after nearly touching its own all-time high. It’s often seen as a bit more speculative, so the swings tend to be sharper. Over in traditional markets, the Nasdaq wasn’t spared either, dipping around 3% as it priced in a higher-for-longer rate reality.
A Sudden Shift in Odds
Then Powell spoke, and the entire narrative flipped. According to the CME FedWatch Tool, the probability of a September rate cut shot right back up after his comments—from that 69% to nearly 90% in a matter of minutes. It’s a stunning reversal that shows just how much weight his words carry. The market isn’t just listening; it’s hanging on every single one. For now, at least, the mood has shifted from caution to something closer to optimism. We’ll see if it lasts.
