Latest news with #CMEFedWatchTool
Mint
6 days ago
- Business
- Mint
The Fed minutes are today. Here's what to watch.
Market participants are hoping to glean how Federal Reserve officials are weighing mixed economic data, renewed inflation concerns, and political threats from the Trump administration from the minutes of the bank's May policy gathering. The Fed held rates steady at the May 6-7 meeting of the Federal Open Market Committee, emphasizing a wait-and-see approach. The meeting minutes, scheduled to be made public at 2 p.m. Eastern on Wednesday, 'should repeat the hawkish message from the May meeting and beyond," wrote Andrew Hollenhorst at Citigroup in a note Tuesday. Fed Chair Jerome Powell expressed worry over tariff-induced inflation during a press conference that followed the meeting, but didn't explicitly rule out rate cuts later this year. Since then, the economic data have been complicated: There are signs of slowing in parts of the economy, but not the kind that would prompt the Fed to move quickly. The April consumer price index report showed a slowing of price growth, but core inflation remains persistent. While retail sales were lackluster, the labor market has so far been resilient. Consumer sentiment has also been a mixed bag. A new survey by the Conference Board showed that Americans improved their view on the economy for the first time in five months in May. But the University of Michigan's preliminary May release showed sentiment falling to its second-lowest level on record. 'The Fed is stuck between generally solid 'hard' economic data but declining 'soft' sentiment and survey data, with the complicating factor that trade policy can and has changed continuously," wrote Jeffrey Hibbeler, director of portfolio management at Exencial Wealth Advisors, in a note Tuesday. 'Under normal circumstances, the Fed may have cut pre-emptively, had inflation not been running above their target for over four years and policy uncertainty at record levels." Other Fed officials have echoed Powell's caution, warning that they are still waiting for clarity on President Donald Trump's trade policy and for his moves to work their way through the economy. At the same time, several have acknowledged that they now expect fewer cuts in 2025 than they had projected earlier this year. That shift will likely show up in the updated Summary of Economic Projections, which includes policymakers' forecasts of interest rates, due at the June meeting. Another area of interest in the minutes will be how much discussion there was regarding market volatility, especially in longer-dated Treasuries. 'Some officials may have mentioned that a sustained move higher in longer-term Treasury yields could ultimately prove a headwind to the economy," said Hollenhorst. The minutes may also offer insight into how unified the committee remains. Some officials have expressed reluctance to cut rates until inflation declines further, while others have warned about the risk of holding too tight for too long. Markets are still pricing in two cuts this year, according to the CME FedWatch Tool, but expectations have pulled back since earlier in the spring. Then there is the question of central bank independence. Trump has openly criticized Powell and pressured the Fed to cut interest rates. A recent Supreme Court decision gave Trump the authority to remove agency heads without cause, at least for now. But it drew a clear distinction between the Fed and other regulators. While the ruling doesn't explicitly prevent the president from firing Powell or any other member of the central bank, it did provide some relief to market participants. It is unlikely the minutes will refer directly to the bank's independence, but if political risk is creeping into the conversation among policymakers, market participants will want to know. The next FOMC meeting is less than a month away. Wednesday's release won't give much in the way of clues about coming policy, but it could shape how investors interpret the Fed's next move and show how confident officials really are in their current path. Write to Nicole Goodkind at
Yahoo
13-05-2025
- Business
- Yahoo
Inflation data to reveal impacts of Trump's 'Liberation Day' tariffs
This week's inflation report will offer a first look at how President Donald Trump's "Liberation Day" tariff announcement has impacted pricing across the United States. Trump's tariff escalation, announced April 2, set off fears among economists and consumers about a possible burst of inflation, since importers typically pass along a share of such taxes in the form of price hikes. Government data, which will be published Tuesday, is expected to show that pricing has defied such worries – at least for now. Economists expect prices to have increased 2.3% over the year ending in April, which would mark a slight cooldown from the prior month. However, many analysts anticipate a rekindling of inflation over the coming months as retailers begin to replenish inventory with goods imported after the tariffs took effect. MORE: Trump administration poised to accept 'palace in the sky' as a gift for Trump from Qatar: Sources Even so, a rollback of some levies since "Liberation Day" may reduce the impact on inflation. Trump paused a large swath of so-called "reciprocal tariffs" within days of the announcement. On Monday, Trump temporarily slashed tariffs on China from 145% to 30%. Levies on China will remain at the reduced rate for 90 days while the two sides negotiate a wider trade agreement, a joint U.S.-China statement said on Monday. China also agreed to temporarily cut its tariffs on U.S. goods from 125% to 10%. The rollback of levies on Chinese goods is expected to reduce the average cost of tariffs per household this year from $4,900 to $2,800, the Yale Budget Lab found. Still, the U.S. continues to impose an array of levies that have been issued since Trump took office. An across-the-board 10% tariff applies to imports from nearly all countries. Additional tariffs have hit auto parts, as well as steel and aluminum. Duties remain for some goods from Mexico and Canada. Speaking last week before the rollback of tariffs on China, Federal Reserve Chair Jerome Powell said the economy remains in "solid shape" but warned Trump's tariff policy could cause higher inflation and an economic slowdown. "If the large increase in tariffs that have been announced are sustained, they're likely to generate a rise in inflation and a slowdown of economic growth," Powell said. "All of these policies are evolving, however, and their effects on the economy remain highly uncertain," he added. MORE: What's in the US-China trade framework? Inflation levels are nowhere near 2022's peak of more than 9% -- though it remains slightly higher than the Federal Reserve's target rate of 2%. The Fed last week opted to leave interest rates unchanged, keeping borrowing costs elevated as policymakers await the impact of tariffs. Central bankers will announce their next interest rate decision on June 18. Investors peg an 88% chance of the Fed maintaining interest rates at current levels, according to the CME FedWatch Tool, a measure of market sentiment. Inflation data to reveal impacts of Trump's 'Liberation Day' tariffs originally appeared on
13-05-2025
- Business
Inflation data to reveal impacts of Trump's 'Liberation Day' tariffs
This week's inflation report will offer a first look at how President Donald Trump's " Liberation Day" tariff announcement has impacted pricing across the United States. Trump's tariff escalation, announced April 2, set off fears among economists and consumers about a possible burst of inflation, since importers typically pass along a share of such taxes in the form of price hikes. Government data, which will be published Tuesday, is expected to show that pricing has defied such worries – at least for now. Economists expect prices to have increased 2.3% over the year ending in April, which would mark a slight cooldown from the prior month. However, many analysts anticipate a rekindling of inflation over the coming months as retailers begin to replenish inventory with goods imported after the tariffs took effect. Even so, a rollback of some levies since "Liberation Day" may reduce the impact on inflation. Trump paused a large swath of so-called "reciprocal tariffs" within days of the announcement. On Monday, Trump temporarily slashed tariffs on China from 145% to 30%. Levies on China will remain at the reduced rate for 90 days while the two sides negotiate a wider trade agreement, a joint U.S.-China statement said on Monday. China also agreed to temporarily cut its tariffs on U.S. goods from 125% to 10%. The rollback of levies on Chinese goods is expected to reduce the average cost of tariffs per household this year from $4,900 to $2,800, the Yale Budget Lab found. Still, the U.S. continues to impose an array of levies that have been issued since Trump took office. An across-the-board 10% tariff applies to imports from nearly all countries. Additional tariffs have hit auto parts, as well as steel and aluminum. Duties remain for some goods from Mexico and Canada. Speaking last week before the rollback of tariffs on China, Federal Reserve Chair Jerome Powell said the economy remains in "solid shape" but warned Trump's tariff policy could cause higher inflation and an economic slowdown. "If the large increase in tariffs that have been announced are sustained, they're likely to generate a rise in inflation and a slowdown of economic growth," Powell said. "All of these policies are evolving, however, and their effects on the economy remain highly uncertain," he added. Inflation levels are nowhere near 2022's peak of more than 9% -- though it remains slightly higher than the Federal Reserve's target rate of 2%. The Fed last week opted to leave interest rates unchanged, keeping borrowing costs elevated as policymakers await the impact of tariffs. Central bankers will announce their next interest rate decision on June 18. Investors peg an 88% chance of the Fed maintaining interest rates at current levels, according to the CME FedWatch Tool, a measure of market sentiment.
Yahoo
13-05-2025
- Business
- Yahoo
Recession forecasts slide in betting markets with US-China trade tensions cooling
Betting markets have adjusted to lower odds of a recession this year after progress on US-China trade talks. The chance of an economic downturn fell to 40% after news that the US and China would lower tariffs for 90 days. Markets broadly are adjusting outlooks on Monday as stocks rally sharply. Bettors in the prediction markets are dialing back recession views, with the odds of a US downturn falling on the latest trade-war developments. Big bets on Polymarket and Kalshi predict a 40% chance of recession as of Monday, down from 52% at the end of last week. Anxiety about the economy is ebbing thanks to progress on trade talks between the US and China over the weekend. Both countries agreed to substantially lower sky-high tariffs for 90 days, temporarily removing a major headwind that has slashed economic and market optimism over the past month. Polymarket's recession outlook hasn't been this low since April 2, a day before the Trump administration unleashed the wave of reciprocal tariffs. Other parts of the market are also growing more upbeat about the path of the economy through the rest of this year. While large-cap US indexes surged on the China tariff update, the Russell 2000 also kept pace, climbing as much as 4%. The index is made up of small-cap stocks, which are typically more susceptible to the cyclical swings in the economy. US crude oil jumped 4% from Friday's close amid stronger prospects for US and global growth to hold up as the trade war cools. Meanwhile, bond yields rose as investors ditched the ultra-safe government bonds in a broad shift to risk. At the same time, expectations for the Federal Reserve to cut interest rates this summer have shifted, with CME FedWatch Tool data indicating that the first rate cut will occur in September, pushed back from July. Just last week, the central bank emphasized major uncertainty about the economy, and analysts warned about a recessionary scenario that could force the Fed to cut rates. With a China trade deal now in the works, a longer timeline on rate cuts suggests that Fed officials have more time before the economy slows enough to demand a response from the central bank. "This removes a major tail risk from the economic outlook," Apollo's chief economist Torsten Slok told Bloomberg TV. "The growth downside risks that everyone is worried so much about, that's coming from no longer having trade between the US and China, is just no longer the risk that we thought, literally, 24 hours ago." Read the original article on Business Insider Sign in to access your portfolio
Business Insider
12-05-2025
- Business
- Business Insider
Recession forecasts slide in betting markets with US-China trade tensions cooling
Betting markets have adjusted to lower odds of a recession this year after progress on US-China trade talks. The chance of an economic downturn fell to 40% after news that the US and China would lower tariffs for 90 days. Markets broadly are adjusting outlooks on Monday as stocks rally sharply. Bettors in the prediction markets are dialing back recession views, with the odds of a US downturn falling on the latest trade-war developments. Big bets on Polymarket and Kalshi predict a 40% chance of recession as of Monday, down from 52% at the end of last week. Anxiety about the economy is ebbing thanks to progress on trade talks between the US and China over the weekend. Both countries agreed to substantially lower sky-high tariffs for 90 days, temporarily removing a major headwind that has slashed economic and market optimism over the past month. Polymarket's recession outlook hasn't been this low since April 2, a day before the Trump administration unleashed the wave of reciprocal tariffs. Other parts of the market are also growing more upbeat about the path of the economy through the rest of this year. While large-cap US indexes surged on the China tariff update, the Russell 2000 also kept pace, climbing as much as 4%. The index is made up of small-cap stocks, which are typically more susceptible to the cyclical swings in the economy. US crude oil jumped 4% from Friday's close amid stronger prospects for US and global growth to hold up as the trade war cools. Meanwhile, bond yields rose as investors ditched the ultra-safe government bonds in a broad shift to risk. At the same time, expectations for the Federal Reserve to cut interest rates this summer have shifted, with CME FedWatch Tool data indicating that the first rate cut will occur in September, pushed back from July. Just last week, the central bank emphasized major uncertainty about the economy, and analysts warned about a recessionary scenario that could force the Fed to cut rates. With a China trade deal now in the works, a longer timeline on rate cuts suggests that Fed officials have more time before the economy slows enough to demand a response from the central bank. "This removes a major tail risk from the economic outlook," Apollo's chief economist Torsten Slok told Bloomberg TV."The growth downside risks that everyone is worried so much about, that's coming from no longer having trade between the US and China, is just no longer the risk that we thought, literally, 24 hours ago."
