Goldman Sachs trader: The pace and magnitude of the Federal Reserve's interest rate cuts depend on the non-farm payroll in September

Rikin Shah, a trader in Goldman Sachs' Fixed Income Division (FICC), among others, said the market had been on the sidelines until the Jackson Hole meeting. Powell's latest statement has given the green light for a September rate cut, especially in the context of the recent jobs data revision that has drawn the Federal Reserve's attention to the job market. This is a prime example of the "downside risks to the labor market" that Powell mentioned at the last FOMC press conference and reiterated in his speech at the Jackson Hole Central Bank Annual Meeting. Goldman traders believe that if August non-farm payroll growth is lower than 100,000, especially in the face of political pressure, it will help to determine a September rate cut. Goldman Sachs noted that if the labor market weakens further, the time window is now. The bank believes that, whether in an economic slowdown or a normalization scenario, the Federal Reserve is likely to complete the current round of interest rate cuts before the next Federal Reserve chairperson takes office, that is, before the end of the first half of 2026.