BofA Securities says August data may reshape the Fed’s September rate outlook

BofA Securities said in a report dated Aug. 31 that market pricing for a September rate hike climbed to nearly 60% after Federal Reserve Chair Kevin Warsh spoke on Friday. Even so, the firm said the path for further tightening is still not settled and may hinge on incoming U.S. economic data for August. According to the report, analysts do not see a September move as guaranteed. They said a very weak August data set could still change the picture, while the absence of a major downside surprise would leave Warsh carrying the burden of a September hike. The August employment report is due this Friday and is likely to be a key input for that assessment. BofA also pointed to the July jobs report, which came in noticeably weaker than analysts had expected. That result has led some economists to question the underlying growth momentum of the U.S. economy. The note frames the coming August releases as a near-term test for whether the Fed proceeds with another increase in September.