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I'll search for recent information about Powell's August statement and market expectations for September interest rate cuts, then create a chart summarizing the key information. Now let me search for more specific financial market trends and sentiment data to create a comprehensive chart. Now let me create a chart summarizing the market sentiment and financial trends based on the information I've gathered: Federal Reserve Chair Jerome Powell delivered a pivotal speech at the Jackson Hole Economic Policy Symposium in August 2024 that significantly shifted market expectations for interest rate policy. His remarks opened the door to a September rate cut, marking a notable change in the Fed's stance amid evolving economic conditions.

Powell's Key Statement and Policy Shift

Powell's August 22 speech represented a clear policy pivot. He stated that "the stability of the unemployment rate and other labor market measures allows us to proceed carefully as we consider changes to our policy stance" and noted that "with policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance." Source: Bloomberg live coverage

The Fed Chair specifically highlighted concerns about the labor market, saying that rising risks for employment warrant consideration of policy adjustments. However, he emphasized a cautious approach, suggesting the Fed would "proceed carefully" rather than making aggressive moves.

September Rate Cut Probability

Market expectations for a September rate cut surged dramatically following Powell's speech:

• Pre-speech probability: Approximately 75% chance of a 25 basis point cut
• Post-speech probability: 91.5% chance according to Fed funds futures markets
• Some analysts, including those at Barclays and BNP Paribas, immediately shifted their forecasts to predict a September move

The market consensus strongly favors a standard 25 basis point reduction rather than a more aggressive 50 basis point cut, despite some political pressure for larger reductions.

Immediate Market Sentiment After Powell's Statement

Financial markets responded enthusiastically to Powell's dovish pivot:

Stock Market Performance:

• The Dow Jones surged over 800 points (1.93%) to hit its first record closing high of 2025
• S&P 500 gained approximately 1.5%
• NASDAQ also posted significant gains

Bond Market Reaction:

• Treasury yields fell sharply, with 2-year yields declining about 10 basis points
• The yield curve steepened as long-term rates remained more elevated
• The spread between 5-year and 30-year rates touched a new cycle high

Currency Impact:

• The U.S. dollar initially strengthened by about 0.4% on the Bloomberg Dollar Spot Index
• This reflected mixed signals as rate cut expectations typically weaken the dollar

Expected Financial Market Trends Through September

Equity Markets: Analysts expect continued positive momentum as rate cut expectations support valuations. However, markets remain sensitive to upcoming economic data, particularly the September 5 jobs report, which could influence the Fed's final decision.

Fixed Income: Bond markets are pricing in the September cut as almost certain. Any deviation from a 25 basis point reduction could cause significant volatility. The yield curve is expected to continue steepening as short-term rates fall faster than long-term rates.

Economic Data Dependency: The key risk to September rate cut expectations lies in potential upside surprises in employment data. Powell specifically noted that a "sizable upside surprise to job growth" in the September 5 jobs report could alter the Fed's calculus.

Political Backdrop: President Trump's criticism of Powell, calling him "too late" and threatening to fire Fed Governor Lisa Cook, adds uncertainty but hasn't materially affected market expectations for September policy action.

The chart above illustrates the dramatic shift in market sentiment, showing how Powell's speech transformed rate cut probabilities from 75% to over 91%, while triggering positive reactions across equity markets and bond yields.