Good morning, traders,
So … the big day is finally here.
After much saber-rattling from the White House lately, today is the day members of the Federal Open Market Committee begin their next two-day meeting to decide the direction of interest rates.
At the helm is embattled Fed Chair Jerome Powell who, despite every political volley that’s come his way lately, still appears to be firmly in wait-and-see mode.
Because until the effects of Trump’s tariffs become clearer (an Aug. 1 deadline is coming up fast on those), and until enough econ data gives a cohesive warning call, there really is no reason to cut rates, in Powell’s view.
Ergo, no surprise cuts are expected by Wednesday afternoon’s press conference despite all the mountains of pressure boiling from the Trump administration.
But that doesn’t mean traders can hit cruise control.
This meeting still matters.
We’re in that weird stretch where the market wants clarity, but the data keeps throwing curveballs.
Meanwhile, the rest of us have to trade in this fog, knowing the Fed probably won’t blink until the labor market shows real signs of cracking.
Too bad the latest unemployment figures don’t come out until Friday.
Until then, here’s what really matters and how to focus through the noise.
No Cut, But Watch the Cracks
The base case heading into this FOMC meeting is clear: no rate cut.
The Fed’s been consistent here. Powell doesn’t want to cut too early and light a match under inflation again.
But while the headline decision is mostly priced in, the statement and Powell’s tone during the press conference still hold weight.
We’ll also likely see some disagreement inside the committee. Maybe two, even three, dissenters who’d prefer a cut now.
That won’t tip the outcome, but it signals growing pressure within the Fed to do something soon.
It’s like watching a poker game where everyone knows the other players are holding junk, but nobody’s folding yet.
Why This Week Is Still Huge
Now, the economic calendar’s jammed up this week — but the big jobs number doesn’t drop until Friday. That means the Fed won’t have it in hand when they make their decision by Wednesday afternoon.
Here’s the consensus right now: Economists expect July’s nonfarm payrolls to come in around 106,000, a noticeable drop from June’s 147,000.
Most of that projected growth is expected to come from the private sector — government hiring probably won’t move the needle much.
If that 106,000 number hits — or worse, comes in even lower — you better believe the market starts sniffing out a September cut in a hurry.
That’s where Wednesday’s ADP report becomes a possible swing factor.
Traders love to hate the ADP numbers, but let’s be honest: When you’re flying blind, any flashlight helps.
If ADP prints light, it adds more fuel to the rate-cut case. If it surprises to the upside? That cut gets pushed further out.
So What Should Traders Do With This?
First, stay flexible.
The market has largely priced in the Fed standing still this week, but the tone of the press conference Wednesday could quickly change expectations for September.
Look for language shifts: Is Powell still talking about needing “more confidence” inflation is falling, or does he start acknowledging slowing growth?
Second, keep your eye on volatility.
We’ve got a Fed meeting, ADP Wednesday, ISM data sprinkled in, and the jobs number Friday, among many others coming out this week.
That’s a recipe for fast moves.
If you’re an options trader, this is where short-dated plays can shine. You don’t need to hold for a home run — grab your singles and doubles while the market jerks around.
Third, don’t fall asleep on sector rotation.
If the market senses a cut is coming soon — especially because of job softness — you’ll likely see rate-sensitive sectors (think real estate, utilities) catch a bid. Tech could get another pop too, but it’s already stretched.
On the flip side, anything that’s been riding the “higher-for-longer” train could get hit.
Sitting Still While Moving
Bottom line: The Fed probably stays put this week, but the pieces are moving.
If ADP comes in soft and Powell even hints at rising internal pressure to ease, we could see a fast shift in expectations for the next meeting. That’s where the edge is right now. not in what they do, but in what they’re getting ready to do.
You don’t need to guess the future. Just trade the reaction.
Keep your positions nimble, keep your emotions flat, and stay tuned for the fireworks. Because they’re coming one way or another.
Stay street smart,
Jeff Zananiri
P.S. Join Danny Phee and I Wednesday at 8 p.m. ET for APEX Live, where we’ll walk you through the setups we’re watching, how the market’s reacting, and where the real opportunities are right now.
This is the most critical session of the quarter.
📅 Wednesday | ⏰ 8 p.m. | APEX Live
*Past performance does not indicate future results
