Market speculators held their breath for the latest inflation data, betting on a “soft” reading that would pave the way for a long-awaited rate cut. With stocks at record highs, their hopes were clearly pinned on a favorable outcome. While the headline CPI number was lower than expected, the Fed’s preferred measure of core inflation, which excludes food and energy, continues to creep higher. This suggests that prices for most goods and services are still on the rise. Meanwhile, a chorus of voices, including political appointees, are urging the Fed to cut rates.
Monetary policy
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Do You Trust this V-Shaped Rally?
Markets staged a ‘rip your face off’ rally on the back of Trump’s 90-day pause on 145% tariffs with China. Over the past three months – the rally ranks among the best we’ve seen in three decades. The question is can it continue; and what needs to happen? My primary concern – it’s not supported by any major change in monetary policy…
Market Sweats Trump Tweets Over Powell
What matters more to the market: (a) a Trump tweet on any potential trade deal; or (b) Jay Powell’s statement on monetary policy? If you ask me it’s the former. Today’s statement from the Fed was almost a non-event for the market. Powell maintained rates in the 4.25% to 4.50% target range (which was expected). However he told the market that the risk of “higher unemployment and higher inflation” have risen since their last meeting. That’s problematic…