From no rate cuts before, to one rate cut, and now the latest expectation of two rate cuts (one in September and another in December), the market continues to price in the expectation of rate cuts amid an economic soft landing.

The key behind this is that the labor market has returned to the relatively tight pre-pandemic equilibrium level. As the unemployment rate climbs above 4%, the Federal Reserve's dual mandate of "inflation vs. employment" has clearly tilted toward employment, showing that the Fed is prioritizing economic growth.

Last night, the market indices became an optimistic interpretation of Powell's statement (rate cuts don’t need to wait until inflation returns to 2%). Moreover, the market is clearly confident about the upcoming CPI data, believing it will decline as expected.