The market is leaning slightly toward a September Fed hike again, but I am still taking the opposite side of that trade: no hike.

The market is leaning slightly toward a September Fed hike again, but I am still taking the opposite side of that trade: no hike.

The reason is not blind optimism.

It is probability.

After Warsh's hawkish Jackson Hole message, rate-hike expectations briefly jumped toward 65%–68%. Then Waller challenged the more aggressive interpretation on September 4, pushing those expectations back toward 50%. Today's August payrolls came in at 162K, far above the roughly 55K consensus, sending hike expectations back toward approximately 57%.

So yes, the market currently has a modest hawkish tilt.

But it is nowhere near certainty.

And that uncertainty is exactly why I think the no-hike side remains interesting.

WHY I STILL FAVOR NO HIKE

First, Warsh did not actually promise a September increase.

His Jackson Hole message emphasized inflation, flexible policy and decisions based on incoming data. His warning that rates could rise was conditional rather than a commitment to immediate action.

That distinction matters.

If inflation deteriorates, a hike becomes possible.

But if the incoming data fails to justify one, the same data-dependent framework can support holding rates unchanged.

Second, the FOMC is not united behind another hike.

The July meeting produced a 9–3 vote, with three officials preferring an increase. Waller's public pushback on September 4 reinforced the idea that the committee remains divided.

Restarting a hiking cycle after months of steady policy requires more than one strong payroll report.

It requires stronger evidence.

Third, strong employment does not automatically mean higher rates.

The latest payroll number gives the Fed room to wait. It does not necessarily force the Fed to hike.

The more important question is whether inflation is accelerating enough to make immediate action necessary.

That is where next week's CPI becomes critical.

Fourth, inflation is still elevated, but the direction matters.

Core PCE remains around 3.3%, well above the Fed's 2% target, but it has eased from its May peak. If the upcoming CPI does not deliver a significant upside surprise, the argument for an immediate September hike becomes harder to defend.

Fifth, some inflation pressures are supply-driven.

Tariffs, energy costs and the investment boom around AI infrastructure are not problems that higher interest rates can easily solve. Raising rates aggressively against supply-side pressure risks slowing demand without directly removing the source of inflation.

That makes patience a viable policy choice.

THE MARKET IS STILL DIVIDED

This is not a one-sided institutional view.

Goldman Sachs' chief economist Jan Hatzius has maintained a no-hike expectation for September, while other analysts and prediction markets have also continued to assign meaningful probability to a hold.

That disagreement itself is important.

If the market were completely convinced about a hike, pricing would not be sitting around the mid-50% range.

MY EVENT-CONTRACT VIEW

I am not saying a September hike is impossible.

I am saying the evidence is still insufficient for me to treat it as the base case.

For me, the key sequence is:

CPI → inflation trend → Fed communication → rate expectations

If CPI comes in hot, the no-hike thesis takes a serious hit.

If CPI is softer or broadly in line, the probability could shift back toward a hold, especially with the committee already divided.

That is the scenario I am positioning around.

The next few days could therefore be more important than today's payroll headline.

Strong NFP increased the hike probability.

But it did not settle the Fed's decision.

Now CPI gets the next vote.

My current view remains:

No September hike — but with risk clearly rising.

The market is leaning toward a hike.

I am betting that the next inflation data can pull those probabilities back toward a hold.

And that is exactly what makes this event interesting.

#Gate事件合约晒单挑战
@Gate_Square