Lorie Logan, President of the Dallas Federal Reserve, did not mention any plans for an interest rate cut in September during her talk at the Bank of Mexico Centennial Conference. She stressed the importance of the Federal Reserve considering different opinions instead of just focusing on the average view. Logan also suggested that the Federal Reserve should improve how it communicates about its balance sheet. She recommended discussing a range for the target federal funds rate.

Lack Of Clear Guidance

There is currently a lack of clear guidance regarding a potential rate cut in September, creating significant uncertainty in the market. This hesitation persists even though Fed fund futures indicate about a 55% chance of a 25-basis-point cut next month. As a result, traders should prepare for increased volatility around important data releases in the upcoming weeks. This uncertainty stems from mixed economic signals. The latest CPI report for July 2025 showed core inflation rising slightly to 2.9%, making it harder to justify an immediate cut. Additionally, the labor market remains strong, with the most recent jobs report showing an increase of 190,000 jobs and unemployment steady at 4.1%. We’ve seen this kind of situation before. In early 2019, the Fed maintained steady rates for several months before moving to cuts. This historical example suggests the central bank prefers to wait for clearer evidence before deciding on further easing. It reinforces the idea that the September meeting is very much open and without a set outcome.

Market Strategy Considerations

In this environment, traders may want to consider strategies that benefit from price fluctuations rather than taking a clear directional bet. Using options straddles or strangles on major indices could be a good approach to handle the volatility surrounding the September FOMC meeting. The CBOE Volatility Index (VIX) has already risen to around 19, reflecting increased market anxiety. In the rates market, the focus on varied opinions within the Fed means the yield curve could react in unpredictable ways. Traders might want to look at derivatives linked to Secured Overnight Financing Rate (SOFR) futures to make their moves. If there is no rate cut in September, near-term yields may rise slightly, while longer-term yields remain stable due to expectations of a slowdown. Create your live VT Markets account and start trading now.

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