Is the Fed ahead or behind the curve?

It has been over a week since the Fed’s decision to cut rates by a half-point, and that’s a decent interval to assess the market reaction. Investors should be aware of one crucial detail about market psychology. Even as the Fed offered a “commitment not to fall behind the curve” as a way of explaining its decision process, a chasm is growing between equity market and fixed income market expectations. On one hand, the futures market’s expectation has evolved to discounting a second jumbo rate cut at the November FOMC meeting, which is rare outside of recessions. On the other hand, the stock market is cheering the pivot in monetary policy and the prospect of a soft landing.

It has become clear from Powell’s remarks at the post-FOMC press conference that the Fed has shifted its focus from its price stability mandate to its maximum employment mandate, especially in light of the tamer-than-expected August PCE report. What happens if the jobs market significantly deteriorates? Will stock prices wobble on fears that the Fed is behind the curve?
 The full post can be found here.