Rate-Cut Signals from Powell🤔

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August 21, 2025

Jeff Williams Presents

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Good morning traders,

Yesterday was a great day for me to take a SPY put trade for my Market Navigator service and while I am out office today, I will be keeping my eyes on what’s to come tomorrow because the Jackson Hole event will have a HUGE impact on markets to close the week.

You can still get in our FREE CHAT ROOM and join Jason Bond LIVE today from 9 -10am ET where he’s been dropping some gems this past week - get in here!

Here’s what traders and markets are looking for at the 2025 Jackson Hole Economic Policy Symposium (Aug 21–23, with Powell’s speech on Friday, Aug 22):

Market Expectations Ahead of Jackson Hole

1. Rate-Cut Signals from Powell

  • Strong odds of a 25 bp cut in September: Rate futures and multiple sources estimate an 80–85% probability of a quarter-point rate cut at the Fed’s Sept 16–17 meeting.

  • Markets divided on a larger cut: While some had hoped for a more aggressive 50 bp cut, expectations have largely moved away from that possibility.

  • Strategic ambiguity expected: Powell is anticipated to leave the door open for a cut but emphasize data-dependent policy—not commit to specifics.

2. Volatility Poised to Surge

  • Calm before the storm: Asset markets have seen unusually low volatility heading into the symposium.

  • Poised for a spike: With the VIX elevated and practitioners pricing in potential swings, traders are preparing for sudden moves—particularly in bonds and equities.

  • Options strategies on the rise: Some traders are positioning with straddles/strangles to capitalize on possible big directional moves—regardless of whether Powell leans dovish or hawkish

3. Impact Across Asset Classes

  • Treasury markets: Yields are narrowly ranged—a break could be triggered by Powell’s tone. The MOVE index (rate volatility) is nearing multi-year lows, signaling suppressed volatility.

  • Equity markets: Growth and rate-sensitive sectors (like homebuilders) are particularly vulnerable to tone shifts; a hawkish stance could lead to a sharp pullback

  • Crypto markets:

    • Bitcoin options show a split in sentiment—traders are anticipating direction based on Powell’s speech.
      Markets have ruled out a 50 bp cut; instead, a 25 bp cut is nearly fully priced

4. Broader Significance

  • Fed leadership and credibility: With Powell delivering what may be his final Jackson Hole keynote as Fed Chair, markets view this as a defining moment for the Fed’s credibility and independence under political pressure.

  • Key policy gaps: After the July FOMC and before the September meeting, there’s nearly seven weeks with no scheduled updates—this speech becomes the lone major signal during that interval

If the Fed decides to talk about rate cuts in September at the meeting tomorrow, then I fully expect to see SPY and the markets fly higher to close the week.

Do you think the Federal Reserve should cut interest rates in the next quarter?

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What’s on your radar to close the week?

Jeff Williams

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