Jackson Hole to Trigger Extended Rally

The labor market squeeze has finally shifted the Fed’s stance on the probability of rate cuts at the upcoming September FOMC meeting. The “higher-for-longer” framework appears to be cracking under the weight of a weakening labor market that risks deteriorating further if rates remain elevated. Importantly, tariffs—which were initially viewed as a potential inflationary shock—have not had the massive adverse impact many feared. The Fed has characterized these as a largely one-off event, not a sustained driver of inflation.