Week 32 (August 4-August 10, 2025)

The week was dominated by evolving Fed policy expectations amid mixed economic data, particularly the labor market, with markets increasingly pricing in rate cuts starting next month and Fed officials publicly discussing this potential shift.

The Federal Reserve's July 29-30 meeting minutes were released on August 6, showing the Fed held rates steady at 4.25-4.5% while indicating a more cautious outlook on the economy and noting the persistence of elevated inflation.

The disagreement at the recent Federal Reserve rate decision centered on two governors, Michelle Bowman and Christopher Waller, who dissented against the committee's majority vote to hold interest rates steady at 4.25%-4.5%. They each advocated for a 25 basis point rate cut instead, marking the first time since 1993 that two Fed governors dissented simultaneously on a rate decision.

Market expectations shifted sharply toward potential Fed rate cuts starting as early as September, driven by softer labor market data and uncer…