Recently, the financial markets are filled with optimistic expectations that the Fed will cut interest rates in September, with some voices even pushing this possibility to over 90%. However, the actual situation may not be so straightforward.

Institutional investors on Wall Street are quietly adjusting their strategies, while retail investors seem to still be chasing this expectation. It is worth noting that the current 4% unemployment rate may create a false impression. Fed officials are cautious about interest rate cuts, as they believe the job market remains strong. Historical experience suggests that cutting rates when the job market is performing well could trigger a rebound in inflation, which is an important factor that Fed Chairman Powell needs to weigh.

At the global central bank annual meeting this week, Powell emphasized a data-driven decision-making approach. However, the key inflation and employment data for August will not be released until September, which means that there may be insufficient data support for a rate cut before the monetary policy meeting in September.

The current market atmosphere resembles a high-stakes gamble, with retail investors betting on interest rate cuts, while Wall Street institutions are starting to cautiously withdraw. It is worth mentioning that Goldman Sachs even advised clients to hedge against the risk of no interest rate cut in September.

In financial markets, when there is a widespread consensus that "this time is different," it often signals potential risks. The Fed's policymaking is always complex, rarely a matter of black and white.

In the face of the current economic situation, investors need to stay clear-headed and consider various possibilities comprehensively, rather than blindly following market sentiment. The Fed's decisions will continue to be based on a comprehensive analysis of economic data, rather than a single factor or market expectations.