The recent minutes from the Fed's July meeting have caused market turbulence. The minutes show that the Fed has kept the interest rate at 4.25%-4.5% for five consecutive times. Notably, for the first time since 1993, two board members (Bowman and Waller) jointly opposed the current policy, expressing concerns that it may lead to a weakening job market.

In this context of decision-making, the U.S. Department of Labor subsequently revised down the non-farm payroll data for May to July, reducing a total of 250,000 jobs. At the same time, the unemployment rate rose to 4.2%, reaching a new high since the end of 2022. Meanwhile, the core CPI and PPI for July both exceeded expectations, creating a clear "dual mandate" conflict between inflationary pressures and employment pressures for the first time.

The market reacted swiftly to these news. The probability of a 25 basis point rate cut in September dropped sharply from 85% to 72%. The Nasdaq index fell by 1.1%, while the yield on the 10-year U.S. Treasury rose to 3.87%.

The upcoming Jackson Hole annual meeting will be the focus of attention. Fed Chairman Powell faces a difficult choice: if he insists on the "inflation-first" strategy, it may contradict the previously emphasized "data-dependent" principle; but if he shows signs of easing, it could lead to a loss of control over inflation expectations.

In the next two weeks, the non-farm payroll data and the PCE (Personal Consumption Expenditures) index will be released successively. These data will provide important references for the Fed's decision-making. How Powell balances the two major goals of employment and inflation has become a focal point of market attention. The Fed's policy direction is not only related to the U.S. economy but will also have far-reaching effects on the global financial markets.