Warsh's Job Easier as Fed Rate Hike Odds Plummet

Fed Chair Kevin Warsh's job has become significantly easier after recent economic reports. The July jobs and inflation numbers have reduced pressure on the Fed to increase interest rates.

The BLS reported a loss of approximately 23,000 jobs in July, which is worse than expected. Additionally, the Consumer Price Index (CPI) rose only 0.1% from June and 3.4% year over year, indicating a slight improvement from June's 3.5% inflation increase.

The Federal funds futures used by CME's FedWatch indicate that traders don't expect a rate hike next month. In fact, the estimated odds of a rate hike in September have decreased to 33%, down from 82% just weeks ago.

This shift in expectations is likely positive for the stock market, especially for growth stocks sensitive to interest rates. Artificial intelligence (AI) infrastructure stocks like CoreWeave and Nebius Group could benefit from this development.