HG MARKETS:

The expectations for a U.S. Federal Reserve rate cut next week are squarely at the center of market attention, as is the uncertainty surrounding the economic data that Fed officials rely on for policy decisions.

With concerns about the strength of the labor market weighing heavily on the Fed, the most crucial data —monthly payrolls—will not be released today. Instead, it is due in mid-December, after last month’s report was never published at all.

Still, the Fed will receive important information tied to the other half of its mandate—managing inflation and supporting employment—when the postponed PCE deflator report, one of its preferred inflation gauges, is released today, even though it covers September.

According to CME Group’s FedWatch tool, the probability of a quarter-point rate cut by the FOMC on Wednesday has risen to 87%, strengthening over the past week after the private ADP jobs report revealed an unexpected drop in November payrolls.

Although weekly jobless claims fell to a three-year low, economists caution that the figures were likely distorted by the Thanksgiving holiday. In turn, the U.S. dollar index is hovering near a five-week low, while global equity markets are enjoying a boost.

Beyond the near-certain rate cut this month, investors are eager for hints about potential policy easing next year, which will be a key point of interest during Chair Jerome Powell’s press conference after the meeting.

But it’s not the only lead on the longer-term rates outlook, after President Donald Trump earlier this week presented White House economic adviser Kevin Hassett as a potential Fed Chair when Powell’s term ends in May.

A Financial Times report said bond investors expressed concerns to the Treasury over the possibility of Hassett as head of the central bank, predicting he would aggressively cut rates to align with Trump’s preference for significantly easier policy settings.

Fed officials are in a blackout period ahead of the meeting, but markets, as always, need to be on alert for social media posts by Trump.