Federal Reserve officials are still trying to make up their minds on the trajectory of interest rate cuts this year while wringing out more prominent inflation elements from the economy.

Interactive Brokers Chief Strategist Steve Sosnick joins Market Domination in-studio to weigh on the Fed's dual mandate ahead of Friday's March jobs report, naming the credit market and banking systems as the silent "third leg" of the dual mandate.

"We'll find out tomorrow whether the job market is healthy. It's important to keep the dual mandate in mind... stable prices [are] closer, but not there yet. [Fed Chair Jerome] Powell is, among them, acknowledging that," Sosnick tells Yahoo Finance. "Full employment, we're still pretty much there. Yes, we took up to 3.9% on the unemployment. Tomorrow, we're expecting a 3.8% tick, but anything that starts with a three pretty much sounds like full employment."

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

Editor's note: This article was written by Luke Carberry Mogan.

Video Transcript

JULIE HYMAN: As we've pushed back the number of rate cuts and the timing of rate cuts this year, equities have performed quite well, in part because it's being pushed back because the economy seems to be still growing at a decent pace. OK. So if there are no rate cuts this year, and it's still for that reason, can equities still perform OK?

STEVE SOSNICK: Yes. The economy-- yeah. Because you hit the nail on the head, Julie. If we're not getting rate cuts because the economy is good, I'll take good economy over rate cuts any time. That was the question we came into as the year started. And I'm actually amazed that the market answered it so painlessly was, how do we get both a soft landing and six or seven rate cuts because they're not both-- they're not happening together? Well, we seamlessly took out the idea of the rate cuts, which is fine if it's because of the strong economy.

But then if you start to throw in some economic worries, if you start to throw in oil price pressures, well, that sort of sounds a little more stagflationary. It ties the Fed's hands without necessarily getting the economic boost. That's not necessarily the scenario wants to hear. We're a ways away from that right now. But I think we're seeing a little defensiveness ahead of the jobs numbers tomorrow. And after having a rip roaring end to the third quarter, we're getting a little hangover this week.

JOSH LIPTON: Steve, you point out the risks of cutting, what about the folks who say, listen, the risks of not cutting as well? And you know that argument, you're too high for too long, you might break something.

STEVE SOSNICK: Oh. Absolutely. There's no question about that. We certainly do have to see a strong economy to justify it. And the numbers are mixed. Every day-- you know, you get a good day one day and a bad number the next day. We'll find out tomorrow whether the job market is healthy. It's important to keep the dual mandate in mind. Stable prices, closer, but not there yet. And Powell is quite among all of them acknowledging that. We're not quite there yet. Things are getting better. But full employment, we're still pretty much there. I mean, yes, we ticked up to 3.9% on the unemployment.

Tomorrow, we're expected to see a 3.8 tick. But anything that starts with a three pretty much sounds like full employment. I guess the third leg of the dual mandate as it were, was sort of healthy credit markets and a stable banking system. But certainly, we're not seeing any those stresses come to light. The Fed would know more about that than any of us would because they're privy to stuff that we don't get to see. But clearly, with the amount of money going to some of the most risky endeavors, it's clear that people are not really holding back on extending credit or spending money throughout the economy.

JULIE HYMAN: I want to talk a little bit more about the jobs report tomorrow because I'm curious how you're gaming that out. I mean, Powell has tried to de-emphasize labor market readings. It seems like they're sort of weighting the inflation readings more heavily right now. He doesn't seem as concerned about the job market. So how do you think the market kind of reacts then?

STEVE SOSNICK: I think he's right to focus more on the stable-- the prices, the inflation. Because as I said, if you've got a dual mandate and you can check the box on one of them, you're going to want people to focus on the part that where you haven't been able to check the box. So gaming out tomorrow's number, I think we're fine if the number comes out around in line, as long as everything is more or less as expected. And I'm not going to plus or minus-- I can't really say plus or minus this or plus or minus that. But if the general reading is around as expected, you're probably OK.

Too hot or too cold can be problematic. Too hot, well, you're not getting rate cuts anytime soon. Too cold, you go back to Josh's question of-- wait a minute, maybe we really need these things, and they're holding off.