Group 1 - Federal Reserve Chairman Jerome Powell emphasized that the softening labor market is becoming a key variable in policy considerations, opening the possibility for a rate cut in September [1][2] - The market interpreted Powell's stance as more dovish than expected, leading to a decline in U.S. Treasury yields and a drop in the dollar, while U.S. stocks strengthened [1][3] - According to CME's FedWatch data, the probability of a 25 basis point rate cut in September rose to 89%, up from 75% the previous day, with expectations for a total cut of approximately 58 basis points this year [1] Group 2 - Powell noted that the U.S. labor market is in an "unusual balance," with both supply and demand significantly slowing down, indicating rising downside risks to employment [2] - The July non-farm payroll data showed an increase of only 73,000 jobs, well below the market expectation of 115,000, with previous months' job additions revised down by 258,000 [2] - Powell highlighted the need for cautious policy adjustments, stating that while the labor market indicators remain stable, changes in the baseline outlook and risk balance may warrant policy adjustments [2] Group 3 - Analysts believe Powell is attempting to downplay inflation risks while emphasizing the urgency of labor market weakness, with some suggesting that a rate cut is almost certain unless the employment report is unexpectedly strong [3] - Powell reiterated that the 2020 revision of the monetary policy framework does not imply a permanent abandonment of the ability to raise rates in response to a strong labor market [3][4] - The latest adjustments to the policy framework provide greater flexibility for the Federal Reserve to respond to a more volatile post-pandemic economy [4]