Powell says exactly what Wall Street wants to hear as Trump provokes soybean battle with China

Monetary Policy and Economic Outlook - Jerome Powell adopted a more dovish tone on monetary policy, indicating potential easing of interest rates, which initially calmed investor nerves [1][5] - The Federal Reserve is currently using federal reserve bank and private data to monitor the economy due to the absence of government data, resulting in an unchanged outlook for inflation and employment [2] - Concerns are rising that the Fed's dual mandate of maintaining 2% inflation and stable employment may conflict, as inflation pressures may necessitate higher rates while slowing job growth may require lower rates [3][4] Employment and Inflation Dynamics - Powell noted a weakening in the employment sector, with payroll gains slowing and risks to employment increasing, despite a low unemployment rate [4] - Inflation remains sticky at around 3%, but longer-term expectations align with the Fed's 2% goal, suggesting a willingness to overlook short-term tariff-related inflation [4] Market Reactions and Investor Sentiment - Following Powell's comments, the likelihood of a 25 basis points cut in the Fed's October meeting rose to nearly 96% [5] - Market volatility increased due to renewed tensions between the U.S. and China, particularly regarding soybean trade, which has affected investor sentiment [6][8] Global Market Performance - Mixed market performance was observed, with S&P 500 futures up 0.59% in early trading, while the Nasdaq Composite was down 0.76% [7][10] - European markets showed slight gains, with Germany's DAX up 0.23% and the Euro STOXX 50 up 1.45% [7][10] Trade Relations with China - President Trump's comments on China's soybean purchases and potential trade retribution have raised concerns about U.S.-China relations, contrasting with previous hopes for a trade deal [9]