Good morning, investors. In unexpected news, I’m writing you the morning after ringing the closing bell at the New York Stock Exchange. More on that later.

Hype is building for Jerome Powell’s speech in Jackson Hole on Friday. Not for nothing, this is like the Super Bowl among market watchers. Today’s edition unpacks what investors expect from Powell and his successor.

Powell or not, rate cuts will be moderate

For all the talk of Jerome Powell’s legacy at the Federal Reserve, investors are signaling it doesn’t matter who fills his shoes.

While President Trump’s nominees for Fed Chair are believed to favor a more aggressive easing cycle, futures markets are nonetheless pricing in a relatively moderate pace of rate cuts over the next year.

The most likely policy path, according to markets, is for rates to fall 125 basis points from current levels starting in September.

Assuming the Fed makes two quarter-point cuts before Christmas, that would imply just three cuts across the first six meetings of 2026 — even though Powell will only preside over half of those.

“The odds of a new Chair quickly pushing policy rates lower are slim, at best,” said DataTrek Research co-founders Nicholas Colas and Jessica Rabe.

The takeaway is that markets aren’t pricing in any sort of “succession premium” tied to any one chairman. The glidepath of monetary policy — regardless of Powell’s successor — appears structural, anchored to the Fed’s backward-looking framework.

If that holds, it would mark a break from recent history.

The personalities and quirks of Fed chairs have long been treated as policy drivers in their own right, but the fact markets do not expect an ostensibly dovish successor to accelerate rate cuts suggests a new trend.

The last five years show a Fed that was late to hike during the historic inflation surge, and critics say it is now just as slow to ease.

Investors have arguably learned to treat those delays as a normal part of an institution that relies on lagged data, rather than the instincts of any individual.

UBS, for its part, expects Powell to use Jackson Hole to “write his history” by reshaping the Fed’s playbook, scaling back the emphasis on employment shortfalls and softening the tolerance for inflation overshoots.

“Those two changes would return monetary policy to something closer to pre-pandemic forecast-base 2.0% inflation targeting,” UBS economist Jonathan Pingle wrote in a note.

“The language and overshooting commitments likely removed too much ability to be pre-emptive and move ahead of inflation increases.”

In any case, markets currently see 83% odds for a quarter-point cut in September, according to CME data.

Prediction markets assign a 72% likelihood, down from 80% a week ago.

Violating those expectations would rattle equity markets, according to Morgan Stanley. Not cutting in September “would be equivalent to a hike,” the bank’s strategists said.

Market snapshot

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Elsewhere

🤝 Trump met with Zelenskyy at the White House. Other European leaders also attended, with the administration working to broker a peace deal between Russia and Ukraine in the war’s fourth year. Late Monday, reports emerged that Putin agreed to meet with Zelenskyy next. (CNBC)

🚀S&P 500 earnings have been stellar. The tech sector led corporate profits to a double-digit climb, easing investors’ economic concerns. Fewer companies mentioned “recession” on earnings calls, down 84% from the start of the year. (WSJ)

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Rapid-fire

• AI is mostly taking outsourced, offshore workers and jobs, according to MIT (Axios)

• Novo Nordisk says it will offer Ozempic for less than half the price to US patients paying cash (CNBC)

• Soaring costs for housing have pushed middle-class parents to have fewer kids than they like or postpone kids later than ever (WSJ)

• Bubble concerns are growing even as tech companies report historic profits (Pomp Letter)

• The US economic outlook may just come down to whether tariffs matter to investors (WSJ)

• How I unexpectedly rang the bell at the NY stock exchange (Blog)

• Veteran strategist Ed Yardeni warns a Fed rate cut won’t actually lower borrowing costs (Opening Bell Daily)

• Intel is getting a $2 billion investment from Softbank (CNBC)

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Last thing

About me

📰 I’m Phil Rosen, co-founder and editor-in-chief of Opening Bell Daily. I’ve published books, lived on three continents, and won awards for my journalism, which has appeared in Business Insider, Fortune, Yahoo Finance, Bloomberg and Inc. Magazine.

I write our flagship newsletter to prepare you for each trading day — unpacking markets, economic data and Wall Street with analysis you won’t find anywhere else.

Feedback? Reply to this email, ping me on X @philrosenn, or write me directly at [email protected].