FOMC Minutes from June 18 - Doves in the minority

July 9, 2025 6:48 PM UTC

FOMC minutes from June 18 show agreement to leave policy at 4.25-4.50%, and general agreement that the FOMC was well positioned to wait for more clarity. While there was some debate over the future outlook, doves appear to be in the minority. A couple were open to easing at the next meeting in July,

Putting Names to the FOMC Dots

July 7, 2025 5:35 PM UTC

There are nineteen FOMC dots. Seven hawks expect no easing this year, and two expect only one 25bps move. Eight are on the median seeing two 25bps moves, while two doves are looking for three. While only two have clearly signaled what their personal dot is, reasonable estimates can be made to identi

U.S. Fed's Barkin - Puts focus on unemployment

July 2, 2025 8:10 PM UTC

Fed's Barkin remains in no rush to ease though policy will depend on incoming data.

DM Central Banks: Overlooking Lagged 2021-23 Tightening and QT?

July 2, 2025 8:30 AM UTC

We are concerned that DM central banks are underestimating the lagged impact of 2021-23 tightening and ongoing QT, which impacts the transmission mechanism of monetary policy.  Central banks need to consider cyclical and structural issues, but also need a more rounded view of the stance and implica

U.S. Fed's Powell - Prudent to wait but won't take July off the table

July 1, 2025 2:46 PM UTC

Fed's Powell states policy is data-dependent. He expects higher inflation while watching for labor market weakness he does not expect.

Trump Tariffs: Poker Face?

July 1, 2025 12:55 PM UTC

Our central scenario (but less than 50%) is towards a scenario of compromise, with some agreements in principle or trade framework deals, delays for most other negotiating in good faith but with one or two countries seeing a reciprocal tariff rise e.g. Spain and/or Vietnam.  This could still be fol

U.S. Fed's Kashkari - Expects two rate cuts this year, possible first cut in September

June 27, 2025 12:11 PM UTC

Kashkari's view puts him on the Fed's median dot. The skew on the dots is hawkish but the decision will depend on data.

U.S. Fed's Collins - Calling for patience, as are most Fed speakers

June 25, 2025 1:59 PM UTC

Fed's Collins, as are most Fed speakers, is backing the wait-and-see approach to policy, particularly in regard to tariffs. 

EM FX Outlook: USD Less in Favor, but EM Mixed

June 25, 2025 8:05 AM UTC

·       The Chinese Yuan (CNY) will likely remain stable while trade negotiations with the U.S. continue.  We see a trade deal in our baseline (probably Q4) and then a small rise in CNY v USD due to general USD weakness. 
·       In terms of total returns for the remainder of 2025, th

Tariffs and the Timing of FOMC Easing

June 24, 2025 6:06 PM UTC

While two Fed Governors. Waller and Bowman, have suggested a July easing could be appropriate, testimony from Chairman Powell suggests a move that early is unlikely, though September is possible if inflation data continues to show a lack of feed through from tariffs. We, and Powell, expect some acce

U.S. Fed's Bostic - Sees one rate cut late this year

June 24, 2025 10:54 AM UTC

Fed's Bostic continues to see only one rate cut this year, not backing Bowman's dovish view given yesterday.

U.S. Fed's Goolsbee - Impact of tariffs not as bad as feared

June 23, 2025 5:50 PM UTC

Fed's Goolsbee has added his voice to those of Waller and Bowman, noting that tariffs have lifted inflation less than feared.

Iran: Measured Next Steps?

June 23, 2025 3:17 PM UTC

  A measured or modest Iran retaliation could be used by the U.S. to seek a path back towards negotiation.  Israel would likely want to continue to degrade Iran nuclear and military facilities, but the U.S. could eventually pressure Israel to stop.  This is our baseline, though the military attac

U.S. Fed's Bowman - Openness to July easing a dovish shift

June 23, 2025 2:40 PM UTC

Fed Governor Bowman's openness to a July easing is a surprise, coming from someone who has recently been a hawk.

DM Rates Outlook: Yield Curve Steepening?

June 23, 2025 8:30 AM UTC

•    We see the U.S. yield curve steepening in the next 6-18 months. 2yr U.S. Treasury yields can step down with cautious Fed easing on a modest/moderate growth slowdown and also if the Fed keeps an easing bias in H2 2026. 10yr U.S. Treasury yields face a tug of war between lower short-dated y

U.S. Fed's Barkin - Contrasts dovish earlier remarks from Waller

June 20, 2025 4:53 PM UTC

Fed's Barkin sees no rush to ease. Earlier Fed's Waller said the Fed could move as early as July.

U.S. Outlook: Slowdown but not Recession, Cautious Fed Easing

June 20, 2025 2:14 PM UTC

•    Policy uncertainty remains high and final details of the tariffs will depend on the decisions of the courts as well as those of President Trump. However the magnitude of the tariffs is becoming easier to predict than the detail. Trump looks set to insist on a minimum average tariff of at

Fed: Hold Then Cautious Easing

June 18, 2025 7:27 PM UTC

Though the SEP reduced growth forecasts and boosted inflation, the guidance from the Fed remains that policy is on hold in the coming meetings.  Though the FOMC median still has two 2025 cuts, the breakdown shows that this was a close call and a lot of members see no cut or only 25bps. We look for

U.S. Fed's Powell - Expecting tariffs to feed into inflation despite recent softer data

June 18, 2025 6:48 PM UTC

Fed's Powell, while welcoming recent softer inflation data, is still wary of the risk from tariffs.

FOMC more pessimistic than March forecasts but not compared to May statement

June 18, 2025 6:23 PM UTC

The FOMC has left rates unchanged at 4.25-4.50% as expected. The median rate forecast is unchanged at 3.9% for end 2025 but the FOMC now sees only 25bps of easing in 2026 rather than 50bps, with 2027 still seeing 25bps, but the end 2027 rate is now seen at 3.4% from 3.1%, leaving a slightly hawkish

Trump Tariffs: China and July 9 Reciprocal Deadline

June 12, 2025 7:17 AM UTC

 We attach a 65% probability to a U.S./China reaching a new trade deal that reduces the minimum overall tariff to 15-20% imposed by the U.S., most likely agreed in Q4 2025 and to be implemented in 2026.  However, a 35% probability exist of no deal and this could eventually mean higher tariffs (Fig

FOMC Preview for June 18: No change in rates or dots, only marginal changes to statement and forecasts

June 11, 2025 4:01 PM UTC

The June 18 FOMC meeting looks highly likely to leave rates unchanged at 4.25-4.5%. We expect only marginal changes to May’s statement and the Fed’s median forecasts from March, with no change at all in the median dots on rates.  Chairman Powell at the press conference may welcome recent signal

U.S. Deficit and Government Debt Concerns

June 10, 2025 9:00 AM UTC

 The large U.S. budget deficit has helped push up 10yr real yields to 2% in 2024/2025, but both the budget deficit (heavy issuance) and government debt trajectories (sustainability and rating concerns) are key going forward if the 10yr budget bill passed is similar to the House Bill.  Foreign acco

U.S. Fed Beige Book Summary - Activity declined slightly

June 4, 2025 6:15 PM UTC

The latest Fed Beige Book shows activity declining slightly, after being little changed in April and increasing slightly in March. Prices are now rising at a moderate pace after being modest to moderate in April, but it is unclear how much tariff based cost increases will be passed on. Whatever pass

Nato Summit 5% Target and Trump

June 3, 2025 10:48 AM UTC

Trump’s natural instincts will likely see extra pressure applied on Europe in the coming weeks to commit to 5%, but we do not see existential threats from Trump.  In the end, our baseline is that NATO will agree a “soft” aim of 5% (3.5% hard military spending and 1.5% infrastructure/cybersecu

Trump’s 50% Steel And Aluminum: Negotiating Leverage?

June 2, 2025 7:42 AM UTC

•    President Donald Trump increase in steel and aluminum tariffs from 25% to 50% is not just about boosting the steel and aluminum industry.  It also a demonstration that Trump remains in control of tariffs and can aggressively change tariffs to increase negotiating leverage.  It is a mess

Tax Foreigners Assets: How To Lose Friends

May 30, 2025 9:12 AM UTC

   Increasing taxes on dividends on U.S. equities and corporate bond coupons would alarm foreign investors and hurt the USD and U.S. equities, as it would amplifies foreign investors concerns that they are overweight U.S. assets and the USD.  Starting a capital war with investors into the U.S. is

Court Stops Trump Reciprocal and Fentanyl Tariff

May 29, 2025 7:18 AM UTC

•    The Trump administration will likely follow a multi-track response by appealing the judgement but also fast-tracking section 232 product tariffs for pharmaceuticals and semiconductors.  The administration could also consider section 301 or 122 tariffs (the latter 15% for 150 days against c

FOMC Minutes from May 7 - Still concerned that inflation could prove persistent

May 28, 2025 7:04 PM UTC

FOMC minutes from May 7 may be a little dated as tariffs on China have subsequently been reduced significantly, but there is no suggestion in any subsequent Fed commentary that the Fed is no longer concerned over the risks that the minutes outline. All participants judged that it was appropriate to

The U.S. Slowdown Question Key for Markets

May 28, 2025 7:35 AM UTC

•    Though financial markets are debating the effects of the U.S. budget deficit trajectory on yields and how much global investors will reduce overweight U.S. exposure long-term, the critical question remains the scale of the economic slowdown and what it means for tactical asset allocation

Big Beautiful Bill will bring larger US budget deficits

May 23, 2025 4:32 PM UTC

The “Big Beautiful Bill” on fiscal policy passed by the House was costed by the Congressional Budget Office on May 20 and shows a significant boost to the budget deficit in the remainder of the current Trump presidential term. This is because tax cuts have been front loaded and spending cuts bac

U.S. Fed's Goolsbee - High bar for rate moves

May 23, 2025 1:10 PM UTC

Fed's Goolsbee has expressed concern over Trump's latest tariff threat, and seems uninterested in near term rate moves. 

U.S. Fed's Waller - Hoping for easing in second half of 2025

May 22, 2025 1:11 PM UTC

Fed's Waller continues his recent relatively dovish tone, seeing scope for easing in H2 2025.

Moody's downgrades US debt as long-standing fiscal concerns mount

May 16, 2025 11:42 PM UTC

Moody’s downgraded US debt to AA1 from AAA after Friday’s close. The decision appears due to continued lack of action on the budget deficit rather that being triggered by any specific event, and brings Moody’s into line with S and P and Fitch. However the timing is awkward for markets, with th

U.S. Fed's Powell - Signals change in Fed policy framework

May 15, 2025 3:18 PM UTC

The Fed after 5 years is due for a review of its policy framework. Powell is signalling that the existing framework is no longer appropriate in the post-pandemic environment. 

U.S./China Trade Truce Reduce Downside and Extra Stimulus Prospects

May 15, 2025 7:15 AM UTC

The alternative hard landing scenario in China has been reduced significantly with the trade truce with the U.S.  However, China will still have to cope with a minimum 30% overall tariff, with only around a 10% reduction in the fentanyl tariff likely to be agreed in the coming months.  Our baselin

U.S. Fed's Jefferson - Still seeing risks on both sides

May 14, 2025 1:28 PM UTC

The trade truce with China does not appear to have changed the views of Fed's Jefferson much.