Step into Powell's shoes/Ueda speaks/The still uneven and seemingly fragile economy

I try to put myself in Powell's shoes and I don't expect anything special today from him. It could be a non-event in terms of market moves. He'll reaffirm market expectations of a September rate cut by again highlighting their shift in focus to the labor market but with more data to absorb before then, he'll have no interest in leaning to what extent they will cut. As for market expectations past that of a full 100 bps by year and and 200 bps by next year's Jackson Hole confab, why would he pre-commit to anything today? Play it by year from here I believe is his thought process. 

This all said, if he talks down the odds of 50 bps next month by reinforcing his confidence in the economy, regardless of the CPI and payroll data he'll see soon, we'll get a selloff in the short end and likely in stocks.

More relevant maybe for the markets is what BoJ Governor Ueda said overnight to a parliamentary session in Japan. Notwithstanding the market earthquake a few weeks ago Ueda blamed worries about the US economy for the selloff, and not the BoJ rate hike, as it came coincident with the rise in US jobless claims and weak July payroll print. He also said there is "no change to the BOJ's basic stance to adjust the degree of monetary easing if it became convinced that economic and price developments were moving as forecast...Japan's short-term rates are very low. If the economy is in good shape, they will move up to levels deemed neutral."

He did though acknowledge the markets response to their rate hike and yen rally and said "We will watch financial markets with an extremely high sense of urgency for the time being." So, the BoJ remains a maybe factor I believe and is looking to raise rates again likely this year. The yen is up and JGB yields are lower in response. The Nikkei though is up too by .4%.