After an ugly overnight session, US equity futures are back in the green this morning following dovish comments from Fed Vice-Chair Williams...

In the text of a speech he delivered Friday in Santiago, Chile, Williams said downside risks to employment have increased while upside risks to inflation have eased.

“I view monetary policy as being modestly restrictive, although somewhat less so than before our recent actions,” he said.

“Therefore, I still see room for a further adjustment in the near term to the target range for the federal funds rate to move the stance of policy closer to the range of neutral, thereby maintaining the balance between the achievement of our two goals.”

Additionally, Williams noted he was more worried about employment than inflation:

“My assessment is that the downside risks to employment have increased as the labor market has cooled, while the upside risks to inflation have lessened somewhat,” Williams said in his speech.

“Underlying inflation continues to trend downward, absent any evidence of second-round effects emanating from tariffs.”

That sent rate-cut odds soaring higher...

Amid the most fractured Fed we can remember (exposed by the Minutes released this week), we are surprised that one man's comments can drive such a surge in the market, but then again, we have argued that very recent market pressure has been aimed at forcing The Fed's hawks back to the table.

Goldman's Delta-One desk head, Rich Privorotsky, was as shocked as we were at the level of hawkishness from The Fed, fearing a policy error (before these comments from Williams to walk back that hawkishness):

"I'm amazed Fed speak remains cautious despite all this and we are "odd's off" on a Dec cut. Arguably a policy error given state of labor market, and I’m in that camp..."

Will stocks need to fall further to trigger The Fed? Or will the reflexive positive reaction to HOPE for a cut, remove the need for an emergency cut?