After a three-day market sell-off, 75% of traders are now pricing in a 50 basis point interest rate cut from the Federal Reserve at its September meeting. Many on Wall Street are even calling for Fed officials to push through an intermeeting rate cut before convening for the FOMC policy meeting.

Apollo Global Management chief economist Torsten Slok joins Catalysts to discuss the Fed's path toward rate cuts as recession fears mount.

"Markets are pricing in too many cuts. It's remarkable what has happened over the last two or three days. Yesterday, at one point, the market was pricing six cuts this year, and now we're back to pricing four cuts this year," Slok explains. He reiterates Fed Chair Jerome Powell's emphasis on the totality of data, noting that the overall economic picture is mixed and that "we are not seeing the economy spiraling into a recession." He believes that if the stock market (^DJI, ^IXIC, ^GSPC) continues to go down for the next several months, there will be more of an argument for a recession.

On Monday, Allianz Chief Economic Advisor Mohamed El-Erian went as far as to say that intermeeting rate cuts would communicate "total panic" and "give the completely wrong signal to the marketplace."

As all eyes are on the Fed's September meeting, Slok believes Powell will be closely watching the next employment report. He explains that while the unemployment rate rose last week, job cuts remain very low overall. Rather, the reason why unemployment rose was likely because of an increase in labor supply caused by an increase in immigration.

"If inflation continues to come down, if the labor market is still okay... we will get that soft landing. That means that if we get that soft landing, which has now been the path and trajectory now for several quarters, then the conclusion is the Fed can then go relatively slowly with lowering interest rates. There's no need to dramatically cut interest rates because there is no dramatic slowdown in the economy," Slok explains.

Note: Apollo Global Management is Yahoo's parent company.

For more expert insight and the latest market action, click here to watch this full episode of Catalysts.

This post was written by Melanie Riehl