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What Not To Expect From The July FOMC Meeting
With apologies to Bill Dudley, the Fed isn't going to cut rates this week.
Dudley grabbed headlines a few days ago for insisting the Fed should start dialing back rates at the July FOMC meeting. He was pretty adamant about it. The labor market's slowing and is anyway in better balance, inflation readings suggest price growth's on its way back to target and, most importantly, Claudia Sahm's eponymous recession indicator has all but triggered.
Meanwhile, the 2s10s has steepened rapidly and looks
H-Man, I don’t believe Powell and the fed are big fans of Trump. A 50 bps cut this week would initially freak the market but ultimately would be well received as good news if unemployment hangs around 150 to 175K. That, in turn, would be good news for the Harris camp. I wouldn’t bet anything on that idea but you never know. Then toss in another 25 in September and rates look pretty good going into the election.
It depends upon what voters you are courting, no? The lucky 20% with larger stock portfolios or the rest of the voters who are more concerned with higher costs of living.
Rate cuts might be welcomed by the lucky 20%, but it’s unlikely that they would send food and energy prices noticeably lower months ahead of the election.
Oh, excuse me. I’m sure that Pepsico will roll back the 60% cumulative price hikes they boasted pushing through on shareholder earnings calls.
This seems to be the bigger influence on inflation: federal government deficit spending, as a percentage of GDP.
https://www.whitehouse.gov/wp-content/uploads/2024/03/hist01z2_fy2025.xlsx
You’re confusing correlation with causation. The US ran deficits every year going back decades with the exception of the latter Clinton years and inflation/bond yields trended lower over that entire period right up until COVID. I know you love your deficit hawk talking points almost as much as your meritocracy myth, so I won’t belabor the point. I don’t want to encroach upon anybody’s fantasy world.