Latest news with #FedPolicy
Bloomberg
4 days ago
- Business
- Bloomberg
Inflation Signs Set Fed Policymakers Up for Unusual Rate Cut
I'm Chris Anstey, an economics editor in Boston. Today we're looking at the outlook for US inflation and Fed policy. Send us feedback and tips to ecodaily@ And if you aren't yet signed up to receive this newsletter, you can do so here. When the Federal Reserve cuts interest rates, its favored inflation gauge tends to be coming down. Or at least, notably lower than where it may be when policymakers gather next month.
Forbes
7 days ago
- Business
- Forbes
Inflation Is Up .2%: Will Trump Now Rig The CPI?
This morning, the Bureau of Labor Statistics (BLS) released the July inflation numbers which are higher as economists expected. Normally, a higher inflation rate would spark somewhat boring debates about Fed policy and consumer sentiment. This time, new danger lurks.: manipulating numbers. The new risk is that the numbers themselves -- how they are calculated, reported, and trusted -- are a political weapon. Trump fired the neutral Bureau of Labor Statistics last week because he didn't like the jobs numbers and yesterday appointed a loyal data soldier. Trump's new Commissioner is a political and partisan economist – E.J. Antoni from the Heritage Foundation – the think tank that wrote Project 2025. Antoni isi expected to report what Trump wants. Here is what President Trump said when he nominated Antoni: 'Our Economy is booming, and E.J. will ensure that the Numbers released are HONEST and ACCURATE,' The CPI Needs To Be Trusted Not Manipulated The Consumer Price Index (CPI) isn't just an economic report; it's the foundation for vast swaths of American economic life. It determines the Social Security cost-of-living adjustment for about 66 million Americans – 57.4 million seniors, 11.2 million disabled adults, and 4.2 million children. It sets the value of Treasury Inflation-Protected Securities (TIPS) and Series I savings bonds. It governs annual increases for federal and military pensions, veterans' benefits, and Supplemental Security Income. But it doesn't stop there. CPI feeds into the calculation of federal tax brackets and penalties, state minimum wages, HUD housing subsidies, rent caps in states like California and Oregon, and collective-bargaining agreements across the private sector. It influences the postal rate you pay, the child support some parents receive, and the rent escalator clauses in commercial and residential leases. The sheer breadth is dizzying: if trust in CPI numbers erodes, so does trust in trillions of dollars in contracts, benefits, and prices. The Precedent for Politicizing And Manipulating Numbers Trust in the integrity of American numbers was severely eroded last week. Former BLS commissioners, one Republican and one Democrat, warned that firing the economist overseeing the statistical agency jeopardizes the integrity of America's statistical agencies. If political leaders can remove the heads of data-producing agencies over numbers they dislike, the pressure to bend the numbers next time will be intense. Former BLS chief, Erica Groshen said if the numbers are rigged, why release the numbers at all. "Statistical agencies live and die by trust. If the numbers aren't trustworthy, people won't use them to make important decisions, and then you might as well not publish them." Since inflation ticked up this morning the CPI could become the next target, the ripple effects could be catastrophic. Investors might begin questioning the reliability of official data. Markets could discount U.S. statistics altogether, pushing up borrowing costs for government and business alike. Ordinary Americans could lose faith that the benefits they depend on are being calculated honestly. Why Manipulating Numbers Is So Dangerous Inflation reports already move markets. A hotter-than-expected number can shave billions off equity valuations in seconds. But add political attacks on the integrity of those numbers, and you have a crisis of confidence. It's one thing to debate economic policy in response to data. It's another to undermine belief in the data itself. Tariff-driven inflation is hard enough to manage—it makes goods more expensive while weakening growth, a stagflationary impulse. And tariffs, Trump's tariffs, are mostly to blame. And tariffs don't hit everyone equally inflation to come in higher, reflecting tariffs that retailers have passed on to consumers. Tariffs act like a regressive sales tax—disproportionately hitting lower- and middle-income households—and they function as a supply shock, raising prices while slowing growth. That's the worst combination for any economy. But combine that with political instability over the accuracy of the numbers, and you inject uncertainty into every corner of the economy. For example, if CPI is seen as inflated for political gain, Social Security beneficiaries may feel their COLA is being manipulated. If it's seen as deflated, bondholders may believe their TIPS payments are being shortchanged. Either way, the perception of manipulation is enough to damage confidence and destabilize markets. The CPI's reach is extraordinary as is the reliance on trusting the numbers. Policy makers could get it wrong if the CPI was manipulated. Consider just a few examples of who is hurt if inflation is undercounted: I wonder if the business community with rise up because Trump chose a political partisan to head the agency who pretty much promises to do what the President wants. So many private contracts are dependent on accurate numbers. Manipulating Statistics Is An Attack On Economic Security Economic data is a public good, built over decades to be insulated from partisan pressure. The BLS has earned its credibility through transparency, methodological rigor, and political independence. Politicizing the bls erodes that trust overnight. If the public begins to suspect that inflation numbers are 'massaged' for political advantage, the damage won't be easy to reverse. Investors might turn to private-sector inflation measures, fragmenting the statistical baseline the economy relies on. State governments might adopt their own indexes, creating a patchwork of measures. Contracts tied to CPI might need renegotiation. And in the meantime, every retiree, every veteran, every family receiving food assistance, and every investor in inflation-protected securities would be living with uncertainty. America's statistical agencies are designed to outlast administrations precisely because data needs to be credible across political cycles. If we don't know what the inflation rate or unemployment rates really are do we know if the Federal Reserve should hold interest rates steady or cut them? Should tariffs be reduced to ease supply-side pressures? Should targeted relief be offered to low-income households most affected by price spikes? Those are hard debates, and they should be. But they must take place against a shared understanding of the facts. Trust Was America's Most Valuable Asset The United States once enjoyed a global privilege: its economic statistics were widely regarded as accurate and unbiased. That reputation had supported the dollar's reserve currency status – which is now under attack by trump's erratic economic decisions. Having a reserve currency is a special privilege. The status lowers borrowing costs for everyone from the federal government to mortgage holders. Trust in data is, in a real sense, a form of national wealth, and politicizing the numbers just made our nation poorer. And rebuilding trust – as anyone knows who has lied or cheated – is far harder than protecting it now. A politicized BLS is a self-inflicted wound.
Reuters
08-08-2025
- Business
- Reuters
Wall Street gains as Trump's interim Fed choice stokes dovish bets
Aug 8 (Reuters) - Wall Street rose on Friday, setting up a strong finish to the week, after President Donald Trump's interim pick for a Fed governor post fueled expectations of a more dovish policy ahead. At 9:34 a.m. ET, the Dow Jones Industrial Average (.DJI), opens new tab rose 134.42 points, or 0.31%, to 44,103.06, the S&P 500 (.SPX), opens new tab gained 17.22 points, or 0.27%, to 6,357.22 and the Nasdaq Composite (.IXIC), opens new tab advanced 44.83 points, or 0.21%, to 21,287.53. Trump moved to reshape the Fed on Thursday, nominating Council of Economic Advisers' chair Stephen Miran for a short-term board seat after Adriana Kugler's abrupt exit—and narrowing his shortlist to replace Jerome Powell, whose term ends May 15. On the same day, Bloomberg News reported that Fed Governor Christopher Waller was emerging as a leading contender for the chair. Investors were being whipsawed by mixed signals over the Fed's future, as Trump's pressure stirs worries about the central bank's independence and a potential leadership reshuffle that could skew policy looser. "The reality is the president can't force a chair to step down or put any additional pressure to make the governors to force rates lower. This is about him putting in folks who are going to be more dovish and ultimately (lead) to deeper rate cuts, whether they're justified or not," said Phil Blancato, CEO, Ladenburg Thalmann Asset Management. In earnings-related moves, Expedia (EXPE.O), opens new tab leapt 9.7% after raising its annual forecast for gross bookings and revenue growth. Monster Beverage (MNST.O), opens new tab gained 9% as the company beat estimates for its second-quarter results. Gilead Sciences (GILD.O), opens new tab jumped 8.9% following its raising of the full-year financial outlook. Trade Desk (TTD.O), opens new tab sank 38% in after the ad-tech firm reported a sharp slowdown in second-quarter revenue growth. Pinterest (PINS.N), opens new tab tumbled 11.5% as the social media platform missed analysts' estimates for second-quarter profit. Sector-wise, consumer discretionary (.SPLRCD), opens new tab could top the leaderboard this week, while healthcare (.SPXHC), opens new tab lags, weighed down mainly by Eli Lilly. The drugmaker fell 14.1% in the previous session after results from a late-stage study on its experimental GLP-1 pill fell behind that of Novo Nordisk's ( opens new tab. On the day, all sectors were trading in the green. Meanwhile, both the S&P 500 and the Nasdaq were on track for their best week in over a month, while the Dow was on track to log modest gains. Equities have ridden a dramatic reset in rate expectations and a flurry of upbeat earnings. Traders now peg a 90% chance of the first rate cut hitting next month, according CME's Fedwatch tool, with futures pointing to at least two cuts by year-end. U.S. tariffs on a bunch of trading partners took effect at midnight on Thursday. Tokyo's trade negotiator said Washington will amend a presidential executive order to remove overlapping tariffs on Japanese goods, terming it as oversight. In a rebuke to Washington, New Delhi shelved fresh U.S. arms and aircraft purchases, according to three Indian officials, after Trump-era tariffs pushed relations to their lowest point in years. St. Louis Fed President Alberto Musalem is scheduled to speak later at 10:20 a.m. ET. Advancing issues outnumbered decliners by a 2.33-to-1 ratio on the NYSE and by a 1.63-to-1 ratio on the Nasdaq. The S&P 500 posted 11 new 52-week highs and two new lows, while the Nasdaq Composite recorded 38 new highs and 32 new lows.
Wall Street Journal
08-08-2025
- Business
- Wall Street Journal
Asian Currencies Consolidate; New Fed Governor Nominee May Underpin
0120 GMT — Asian currencies consolidate against the dollar in the morning session. President Trump said that he would nominate Stephen Miran, head of the White House Council of Economic Advisers, to fill a vacancy on the Fed's Board of Governors on a short-term basis. 'Miran has been very critical of U.S. Fed policy and would likely advocate for cuts,' NAB's Tapas Strickland says in a commentary. 'This makes at least two rate cuts by the end of the year much more probable,' the head of Market Economics adds. USD/KRW edges 0.1% higher to 1,384.90, USD/SGD is little changed at 1.2831, and USD/CNH is steady at 7.1826, LSEG data show. (
Yahoo
07-08-2025
- Business
- Yahoo
Reports of Waller as New Fed Chair Seen as Dollar-Supportive
The dollar index (DXY00) on Thursday rose by +0.23%. The dollar recovered from a 1.5-week low today and turned higher on reports that President Trump was seen as favoring Fed Governor Waller to be the new Fed Chair. The appointment of Waller as Fed Chair would ease market concerns about the Fed Chair being a yes man for President Trump, as Waller said back in April that the Fed's independence is "critical to the well-functioning of the US economy." Higher T-note yields on Thursday also supported the dollar. The dollar initially moved lower Thursday on a larger-than-expected increase in weekly US jobless claims, a dovish factor for Fed policy. Also, dovish comments from San Francisco Fed President Mary Daly weighed on the dollar when she said it may be appropriate for the Fed to cut interest rates in the "coming months." More News from Barchart Have Metals Gone Softs? Dollar Falls on Dovish Fed Comments Dollar Weakens on Dovish Fed Comments Get exclusive insights with the FREE Barchart Brief newsletter. Subscribe now for quick, incisive midday market analysis you won't find anywhere else. Also, questions about the Fed's credibility continue to weigh on the dollar after Fed Governor Adriana Kugler resigned last Friday, which could prompt President Trump to nominate a new governor who is more dovish and could undermine Fed Chair Powell's influence. US weekly initial unemployment claims rose +7,000 to 226,000, showing a weaker labor market than expectations of 222,000. Weekly continuing claims rose +38,000 to a 3.75-year high of 1.974 million, higher than expectations of 1.950 million and a sign that unemployed people are taking longer to secure new employment. US Q2 nonfarm productivity rose +2.4%, higher than expectations of +2.0%. Q2 unit labor costs rose +1.6%, slightly stronger than expectations of +1.5%. US Jun consumer credit rose by +$7.371 billion, slightly below expectations of +$7.500 billion. Late Wednesday, San Francisco Fed President Mary Daly said, "The labor market has softened, and I would see additional slowing as unwelcome. All this means that the Fed will likely need to adjust monetary policy in the coming months." Atlanta Fed President Raphael Bostic said he only sees one 25 bp rate cut by the Fed this year, as there are reasons to be skeptical that the inflationary effects from tariffs will be temporary. In recent tariff news, President Trump announced Wednesday that he will impose a 100% tariff on semiconductor imports. Still, companies would be eligible for exemptions if they demonstrate a commitment to building their products in the US. However, the US will levy a separate tax on imports of electronic products that employ semiconductors. Also, President Trump announced Wednesday that he will double tariffs on US imports from India to 50% from the current 25% tariff, due to India's purchases of Russian oil. On Tuesday, Mr. Trump said that US tariffs on pharmaceutical imports would be announced "within the next week or so." Last Thursday, President Trump raised tariffs on some Canadian goods to 35% from 25% and announced a 10% global minimum, along with tariffs of 15% or higher for countries with trade surpluses with the US, effective today. According to Bloomberg Economics, the average US tariff will rise to 15.2% if rates are implemented as announced, up from 13.3% earlier, and significantly higher than the 2.3% in 2024 before the tariffs were announced. Federal funds futures prices are discounting the chances for a -25 bp rate cut at 91% at the September 16-17 FOMC meeting and 64% at the following meeting on October 28-29. EUR/USD (^EURUSD) Thursday fell by -0.31%. The euro retreated from a 1.5-week high Thursday and moved lower on weaker-than-expected news on German industrial production. Also, the dollar's strength on Thursday weighed on the euro. In addition, the euro is struggling due to concerns that President Trump's tariff policies will curb economic growth in the Eurozone. The euro initially moved higher Thursday on hopes for an end to the Russian-Ukrainian war, with President Trump expected to meet with Russian President Putin in the next few days to discuss an end to the conflict. Also, Thursday's stronger-than-expected German trade news is supportive of the euro. German June industrial production fell by -1.9% m/m, weaker than expectations of -0.5% m/m and the largest decline in 11 months. German trade news was better than expected as German June exports rose +0.8% m/m, stronger than expectations of +0.4% m/m. Also, June imports rose +4.2% m/m, stronger than expectations of +0.8% m/m and the largest increase in 5 months. Swaps are pricing in a 12% chance of a -25 bp rate cut by the ECB at the September 11 policy meeting. USD/JPY (^USDJPY) Thursday rose by +0.09%. The yen moved slightly lower against the dollar Thursday after Japan's Cabinet Office cut its Japanese 2025 GDP estimate. Also, concerns that US tariff policies will harm the Japanese economy are weighing on the yen. In addition, higher T-note yields on Thursday undercut the yen. Losses in the yen were limited after Japan's June leading index CI rose more than expected. The Japan June leading index CI rose +1.3 to 106.1, stronger than expectations of 106.0 Japan's Cabinet Office cut its Japanese 2025 GDP estimate to 0.7% from a January estimate of 1.2% and raised its CPI estimate to 2.4% from 2.0%. December gold (GCZ25) on Thursday closed up +20.30 (+0.59%), and September silver (SIU25) closed up +0.392 (+1.03%). Precious metals on Thursday settled higher, with gold posting a 2-week high and silver posting a 1.5-week high. Thursday's US weekly jobless claims report showed weakness in the US labor market, which is dovish for Fed policy and a bullish factor for precious metals. Also, dovish comments from San Francisco Fed President Mary Daly were supportive of the demand for precious metals as a store of value when she said it may be appropriate for the Fed to cut interest rates in the "coming months." Gold buying by China's central bank is also supportive of gold prices as the PBOC bought 60,000 troy ounces of gold for its reserves in July, the ninth consecutive month it has boosted its gold purchases. Finally, Thursday's action by the BOE to cut its official bank rate by -25 bp was supportive of precious metals. Gains in precious metals prices were limited due to the strength of the dollar. Also, an easing of geopolitical risks has curbed some safe-haven demand for precious metals on news that Presidents Trump and Putin will meet in the next few days to discuss ending the war in Ukraine. Precious metals still have safe-haven support on concerns that President Trump's tariff policies will weigh on global economic growth prospects. Finally, precious metals continue to receive safe-haven support from geopolitical risks, including the conflicts in Ukraine and the Middle East. On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Sign in to access your portfolio
