Markets should be pretty boring today until the FOMC says something, which won’t be tomorrow since it is a 2-day meeting.
We are getting some certainty on tariffs. The EU and Japan both recently announced deals with Trump. Inflation is down. Gas prices are down due to Trump’s energy policy. The border is sealed,8 and jobs for Americans are opening up. Virtually none of the sturm and drang predicted by academics, the Wall Street Journal, Democratic politicians, or general cranks has happened. The stock market is on a bit of a tear.
It sort of reminds me of 2019 until Covid hit.
The naysayers on Trump and tariffs have been totally wrong so far. It works in theory, but in practice, it doesn’t work. I don’t know when the pressure from tariffs will be felt exactly since it takes time to work through the system, similar to an interest rate move.
On FOMC days, there wasn’t much to do when I traded interest rate futures. Most of the time, we’d golf and then go in if the weather was decent. The announcements used to be a big deal, but as the Fed became more predictable, they became anticlimactic. You could still scalp a few ticks, though.
I can’t see a single reason why the Fed would want to hold rates steady other than Powell flexing his muscles and showing independence from Trump. I think they could easily ease .25 basis points and probably .50 basis points.
A look at Fed Funds futures shows a July price of 95.6725, or 100-95.6725=4.32%. That tracks with the current Fed Funds rate, so no one is thinking there will be a move in rates.
Not moving is a bad policy. The Fed hasn’t ever avoided bad policy. They are always behind the curve.
The cost to finance the debt would go down. Win for taxpayers and for Trump. The interbank market would be slightly less jumpy than it is. Home loans would decrease. Win for taxpayers and win for Trump.
Right now, it feels like the current rate is not data-driven. It’s political.
Couldn't agree more Jeff that Powell is playing politics here. I don't have an MBA or other degrees besides a BA in Economics from Marquette Univ., but I CAN read the signs in the economy and know with a good bit of confidence that rates should be lowered by half a point!
Jeff, your comparison to 2019 is spot on. Why is it that people like Powell, who's gonna be gone in less than a years' time anyway, think only of themselves? From my perspective, he's doing a lot of damage to his reputation and standing in the history books!!! Does he really want to be remembered for being part of the "Resistance"?
Indeed, it is political which pisses us off. Trump putting failed lawyer globalist Powell front and center last week was an outstanding political move. Powell looked extremely uncomfortable and it was glorious. He thinks he is more powerful than the President on behalf of the Ponzi Schemers and it is sickening.
in 2019 we had the highest purchasing power of our lives until the CCP and our government unleashed a bad flu... Trump - Art Laffer and Paul Volker - policies work, but not for the Cartel.