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Yahoo
31-07-2025
- Business
- Yahoo
A quirk in the Fed's calendar puts extra pressure on the September meeting
Nobody really knows what the future will bring, but Wall Street likes to have a good idea, especially when it comes to the Federal Reserve's next move. What might have been a likely outcome for the central bank to cut rates in September now seems closer to a toss-up, based on the way the market is reacting to Fed Chair Jerome Powell's latest remarks. At the end of the Fed's policy meeting on Wednesday, Powell didn't explicitly say the next move would be a cut, and reiterated that it's still early days in understanding how tariffs will impact inflation. (Markets flashed red following Powell's commentary, and the CME FedWatch tool showed the likelihood of a cut in September dropped from 65% on Tuesday to 45% at the end of the meeting.) Read more: How the Fed rate decision affects your bank accounts, loans, credit cards, and investments Sign up for the Yahoo Finance Morning Brief By subscribing, you are agreeing to Yahoo's Terms and Privacy Policy Fed policymakers don't make rate decisions ahead of time, so Powell's response is typical. But a quirk in the Fed's calendar raises the stakes for the September meeting. As Morgan Stanley's chief US economist Michael Gapen has observed, the gap between the Fed's July and September huddles is the longest in the Fed's annual schedule. A lot can happen between now and then. "A reasonable base case is that the effects on inflation could be short-lived, reflecting a one-time shift in the price level, but it is also possible that the inflationary effects could instead be more persistent, and that is a risk to be assessed and managed," Powell said during the press conference Wednesday. We do have some level of certainty, however. Powell indicated that, to some extent, the Fed has already chosen to look through the inflationary effect of tariffs as a one-time event. The Fed, he reminded everyone in a not-so-comforting way, could have raised rates to counteract the pricing pressures of the new levies. But he and most of his colleagues think it best to wait for now. However, a long enough wait can result in a different outlook. As Powell himself acknowledged, 'We're going to be looking at a lot of data in the next cycle. It is one of the cycles where we have two employment and two inflation reports, and we'll see where that takes us.' As the timeline stretches out, uncertainty can expand. Of the data ahead, Powell noted that he's especially keeping his eye on the unemployment rate, as both supply and demand for jobs have declined — deprioritizing the headline monthly job gains. But if the unemployment rate starts to rise, that's a good indicator that the central bank has kept up its slightly restrictive posture for too long. But he also suggested the fight to curb inflation "is most of the way back." We already have two dissenters on the rate-setting committee who believe the Fed should already be cutting. So maybe September will be a no-brainer, and looking back to the July meeting will seem like an overreaction to Powell keeping his options open. The Fed is going to get more data than normal before its next move. Those figures could, however, be in conflict with each other, or suggest keeping a restrictive policy, extending the painful decision making until later in the year. More data will bring more insight. But that can also mean more waiting. Hamza Shaban is a reporter for Yahoo Finance covering markets and the economy. Follow Hamza on X @hshaban. Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Yahoo
31-07-2025
- Business
- Yahoo
A quirk in the Fed's calendar puts extra pressure on the September meeting
Nobody really knows what the future will bring, but Wall Street likes to have a good idea, especially when it comes to the Federal Reserve's next move. What might have been a likely outcome for the central bank to cut rates in September now seems closer to a toss-up, based on the way the market is reacting to Fed Chair Jerome Powell's latest remarks. At the end of the Fed's policy meeting on Wednesday, Powell didn't explicitly say the next move would be a cut, and reiterated that it's still early days in understanding how tariffs will impact inflation. (Markets flashed red following Powell's commentary, and the CME FedWatch tool showed the likelihood of a cut in September dropped from 65% on Tuesday to 45% at the end of the meeting.) Read more: How the Fed rate decision affects your bank accounts, loans, credit cards, and investments Sign up for the Yahoo Finance Morning Brief By subscribing, you are agreeing to Yahoo's Terms and Privacy Policy Fed policymakers don't make rate decisions ahead of time, so Powell's response is typical. But a quirk in the Fed's calendar raises the stakes for the September meeting. As Morgan Stanley's chief US economist Michael Gapen has observed, the gap between the Fed's July and September huddles is the longest in the Fed's annual schedule. A lot can happen between now and then. "A reasonable base case is that the effects on inflation could be short-lived, reflecting a one-time shift in the price level, but it is also possible that the inflationary effects could instead be more persistent, and that is a risk to be assessed and managed," Powell said during the press conference Wednesday. We do have some level of certainty, however. Powell indicated that, to some extent, the Fed has already chosen to look through the inflationary effect of tariffs as a one-time event. The Fed, he reminded everyone in a not-so-comforting way, could have raised rates to counteract the pricing pressures of the new levies. But he and most of his colleagues think it best to wait for now. However, a long enough wait can result in a different outlook. As Powell himself acknowledged, 'We're going to be looking at a lot of data in the next cycle. It is one of the cycles where we have two employment and two inflation reports, and we'll see where that takes us.' As the timeline stretches out, uncertainty can expand. Of the data ahead, Powell noted that he's especially keeping his eye on the unemployment rate, as both supply and demand for jobs has declined — deprioritizing the headline monthly job gains. But if the unemployment rate starts to rise, that's a good indicator the central bank has kept up its slightly restrictive posture for too long. But he also suggested the fight to curb inflation "is most of the way back." We already have two dissenters on the rate-setting committee who believe the Fed should already be cutting. So maybe September will be a no-brainer, and looking back to the July meeting will seem like an overreaction to Powell keeping his options open. The Fed is going to get more data than normal before its next move. Those figures could, however, be in conflict with each other, or suggest keeping a restrictive policy, extending the painful decision making until later in the year. More data will bring more insight. But that can also mean more waiting. Hamza Shaban is a reporter for Yahoo Finance covering markets and the economy. Follow Hamza on X @hshaban.
Yahoo
31-07-2025
- Business
- Yahoo
A quirk in the Fed's calendar puts extra pressure on the September meeting
Nobody really knows what the future will bring, but Wall Street likes to have a good idea, especially when it comes to the Federal Reserve's next move. What might have been a likely outcome for the central bank to cut rates in September now seems closer to a toss-up, based on the way the market is reacting to Fed Chair Jerome Powell's latest remarks. At the end of the Fed's policy meeting on Wednesday, Powell didn't explicitly say the next move would be a cut, and reiterated that it's still early days in understanding how tariffs will impact inflation. (Markets flashed red following Powell's commentary, and the CME FedWatch tool showed the likelihood of a cut in September dropped from 65% on Tuesday to 45% at the end of the meeting.) Read more: How the Fed rate decision affects your bank accounts, loans, credit cards, and investments Sign up for the Yahoo Finance Morning Brief By subscribing, you are agreeing to Yahoo's Terms and Privacy Policy Fed policymakers don't make rate decisions ahead of time, so Powell's response is typical. But a quirk in the Fed's calendar raises the stakes for the September meeting. As Morgan Stanley's chief US economist Michael Gapen has observed, the gap between the Fed's July and September huddles is the longest in the Fed's annual schedule. A lot can happen between now and then. "A reasonable base case is that the effects on inflation could be short-lived, reflecting a one-time shift in the price level, but it is also possible that the inflationary effects could instead be more persistent, and that is a risk to be assessed and managed," Powell said during the press conference Wednesday. We do have some level of certainty, however. Powell indicated that, to some extent, the Fed has already chosen to look through the inflationary effect of tariffs as a one-time event. The Fed, he reminded everyone in a not-so-comforting way, could have raised rates to counteract the pricing pressures of the new levies. But he and most of his colleagues think it best to wait for now. However, a long enough wait can result in a different outlook. As Powell himself acknowledged, 'We're going to be looking at a lot of data in the next cycle. It is one of the cycles where we have two employment and two inflation reports, and we'll see where that takes us.' As the timeline stretches out, uncertainty can expand. Of the data ahead, Powell noted that he's especially keeping his eye on the unemployment rate, as both supply and demand for jobs has declined — deprioritizing the headline monthly job gains. But if the unemployment rate starts to rise, that's a good indicator the central bank has kept up its slightly restrictive posture for too long. But he also suggested the fight to curb inflation "is most of the way back." We already have two dissenters on the rate-setting committee who believe the Fed should already be cutting. So maybe September will be a no-brainer, and looking back to the July meeting will seem like an overreaction to Powell keeping his options open. The Fed is going to get more data than normal before its next move. Those figures could, however, be in conflict with each other, or suggest keeping a restrictive policy, extending the painful decision making until later in the year. More data will bring more insight. But that can also mean more waiting. Hamza Shaban is a reporter for Yahoo Finance covering markets and the economy. Follow Hamza on X @hshaban. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
AU Financial Review
30-07-2025
- Business
- AU Financial Review
ASX to slip, Fed decision and Powell's comments awaited
Australian shares are poised to rise, tracking gains in New York after data reconfirmed the resilience of the US economy. Investors are waiting for the Federal Reserve's 4am AEST policy decision. Meta and Microsoft are set to report results after Wall Street's closing bell at 6am AEST. US government bond yields were higher after the Treasury Department signalled it will rely more on the shortest-dated securities to fund the gaping federal deficit at least until 2026. The S&P 500, coming off its best streak of gains since 2020, is about to enter what has historically been its toughest stretch of the year. Over the past three decades, the benchmark has performed the worst in August and September, losing 0.7 per cent on average in each month, compared with a 1.1 per cent gain on average across other months, data compiled by Bloomberg show. The US economy expanded an annualised 3 per cent pace in the June quarter, however economists were wary of reading too much into the print. 'We retain our outlook for a slowdown in US GDP growth in 2024, as restrictive trade and immigration policies outweigh the benefits from fiscal policy and deregulation,' Morgan Stanley's Michael Gapen wrote in a note. 'Prior to this report, we were forecasting Q4/Q4 growth of 0.8 per cent in 2025; we now expect 1.0 per cent, reflecting the stronger 2Q out turn but no extrapolation into later quarters. We continue to expect 1.1 per cent growth in 2026.' Market highlights ASX futures are pointing down 7 points or 0.1 per cent to 8708. All US prices near 2.30pm New York time. *Bloomberg pricing Today's agenda Quarterly reports expected on Thursday from Beach Energy, Liontown Resources and Origin Energy. RBA deputy governor Andrew Hauser will participate in a fireside chat at the Barrenjoey Economic Forum, Sydney at 9.20am AEST. A wave of data is set for release at 11.30am AEST, including June retail sales, building approvals, private sector as well as import and export price data. NAB said its retail transactions data suggests a strong rise in the month and 'we have pencilled in a 1.0 per cent month-over-month increase'. As for overseas, Japan will release June retail sales and industrial output, China will release manufacturing and non-manufacturing PMIs for July and the Bank of Japan will hold a policy meeting. Later, the US will release June personal spending and core PCE price data, a quarterly employment cost index and weekly jobless claims. On the BoJ decision, TD Securities said: ' US-Japan trade deal was struck, but we expect the BoJ to stand pat this month, holding the target rate at 0.5 per cent. 'After the poor showing of the ruling coalition in the Upper House elections, PM Ishiba is facing calls to step down and Japan is likely to enter a phase of political uncertainty. That said, Governor Ueda may signal a hike in October is still on the table as inflation is running at a 30-year high and we will get more clarity on both trade and politics then.' Top stories Rio Tinto boss defends lithium push as earnings slump cuts dividend | The country's biggest iron ore exporter will pay its lowest dividend since 2018 after lower prices and weaker sales volumes hurt its half-year bottom line. | India 'is our friend', the US president said on his Truth Social platform, but its tariffs 'are far too high' on US products. Atlassian gang back together as Farquhar hits Canberra to spruik AI | The billionaire co-founders of the software giant reunited at the National Press Club, setting aside long speculation of a rift in their relationship. | A broader push for higher taxes at the productivity roundtable in August could soften hostility towards the proposed super tax, the government believes. | Commonwealth Bank held the rights to sponsor Cricket Australia for four decades – then Westpac CEO Anthony Miller stole it from under their nose.
New York Times
30-07-2025
- Business
- New York Times
U.S. Economy Grew in Second Quarter as Tariffs Scrambled Data
Economic growth softened in the first half of the year, as tariffs and uncertainty upended business plans and scrambled consumers' spending decisions. The disruptions extended to the economic data itself. Gross domestic product, adjusted for inflation, increased at a 3 percent annual rate in the second quarter, the Commerce Department said on Wednesday. On the surface, that appeared to represent a strong rebound from the first three months of the year, when output contracted at a 0.5 percent rate. But both those figures were skewed — in opposite directions — by big swings in trade and inventories caused by President Trump's ever-shifting tariff policies. Taken as a whole, the data from the first six months of the year tell a more consistent story of anemic, though positive, economic growth. Many forecasters expect a further deterioration in the months ahead, as tariffs work their way through supply chains, federal job cuts filter through the economy and stricter immigration policies take a toll on industries that rely on foreign-born workers. 'We don't think we've seen the full effects from tariffs yet,' said Michael Gapen, chief U.S. economist for Morgan Stanley. 'I don't see how we power through without a soft patch at least for a little while.' But the economy has repeatedly defied such gloomy predictions in recent years, and some forecasters believe it could do so again. Unemployment remains low, measures of consumer confidence have rebounded, and tariffs have so far done little to push up prices overall. The tax-and-spending bill passed by Congress this month could also provide a short-term boost to economic activity, although many budget experts have warned that it could pose a long-term risk by adding trillions to the federal debt. 'We're going to look back and either say, 'Wow, the economy was super resilient and these things didn't matter as much as we thought they would,' or we're going to say, 'Yeah, you could kind of feel it was weakening,'' said Louise Sheiner, an economist at the Brookings Institution. 'I think we just don't know.' Officials at the Federal Reserve will be weighing those dueling narratives at their meeting on Wednesday. They are widely expected to hold interest rates steady, but a flood of economic data this week could help decide whether and when they will cut rates again. The data released on Wednesday showed that consumer spending grew at a 1.4 percent annual rate in the second quarter. That was a modest acceleration from the 0.5 percent rate in the beginning of the year, but was well below the 2.8 percent growth in spending in 2024. The second-quarter figures are preliminary and will be revised at least twice in coming months as more complete data becomes available. Those revisions can be significant: Many economists initially dismissed the contraction in G.D.P. in the first quarter because consumer spending was solid and measures of underlying growth were strong. But subsequent updates made the first quarter look significantly weaker than the preliminary data had suggested.
