06:53 AM EDT, 09/16/2024 (MT Newswires) -- US equity investors will watch out for the Federal Reserve commentary and interest-rate forecasts this week as a larger, 50 basis-point cut has become the most likely policy move.

* The probability of the 50 basis-point cut on Sept. 18 stood at 59% early Monday versus 30% a week ago, as per the FedWatch Tool, following the inflation data released on Sept. 11 and 12. The remaining 41% likelihood was a 25 basis-point drop versus 70% a week earlier.

* Two issues for investors are the size of the rate cut and the path forward that the Fed communicates, Derek Holt, head of capital markets economics at Scotiabank, said Friday. Alongside policy, the Fed will release its quarterly Summary of Economic Projections. It includes updated macro forecasts and the so-called 'dot plot' of policymakers' interest-rate views.

* Fed's dual mandate data since its July 31 decision has been "incrementally dovish," Holt said, putting into perspective the bigger-cut rationale. Nonfarm payrolls rose by "only" 89,000 in July and 142,000 in August. Core inflation was "little mixed" but still trending "softer." Fed Chair Jerome Powell has signaled concern about the labor market and said the Fed would do "everything we can to support a strong labor market as we make further progress towards price stability."

* However, up-sizing cuts could signal the Fed is "really worried" about something, Holt said while arguing for a small cut. The US economy grew 3% in Q2, and the 'nowcast' efforts by the Atlanta Federal Reserve and New York Federal Reserve rest around 2.5% for Q3. "The soft landing we've always expected continues to unfold," he added.

* Both the 10-year and two-year Treasury yields fell last week, with the latter hitting a 52-week low early Monday. The 10-year yield began the week trending lower.

* US retail sales are due Tuesday, a day before the FOMC decision.

* General Mills ( GIS ) , FedEx ( FDX ) , and Lennar ( LEN ) are among the companies reporting quarterly results this week.