Fed Blackout Period: What It Means for Markets

The Federal Reserve has officially entered its blackout period ahead of the September 19th FOMC meeting. During this time, no Fed officials are allowed to make public statements, leaving markets in a holding pattern. The next major focus is Wednesday’s U.S. CPI data, which will play a crucial role in determining the Fed’s next move. Currently, markets are pricing in a 25 basis point rate cut, but a weaker-than-expected inflation print could shift expectations toward a more aggressive 50 basis point cut.

Expect calm markets in the lead-up to the CPI release, but be prepared for volatility spikes once the data is out. Investors will be closely watching key inflation components, such as core CPI, which has been more stubborn than headline inflation. Any unexpected results could significantly impact assets like the U.S. dollar and equity markets, particularly the S&P 500.

Additionally, given the labor market’s recent mixed signals—job growth slowing but not collapsing—Wednesday’s inflation data could provide more clarity on the Fed’s balancing act between controlling inflation and supporting the labor market. Keep a close eye on CPI numbers, as this data will be pivotal in shaping expectations for the Fed’s decision on September 19th.