Follow the Fed

Escalating political interference risks Fed leadership chaos ahead of Warsh's April 21 hearing:

• Jan 30: Trump nominates Kevin Warsh to succeed...

ING's latest take on major central banks emphasizes critical indicators for policy outlook:

• Actual inflation data
• Survey-based longer-term inflation expectations
• Wage developments

These factors will be weighed heavily—watch them for market moves.

Treasury Secretary Bessent understands the Fed's approach of waiting before cutting interest rates based on its own considerations. Key Treasury support amid cut speculation.

Key hawkish angles from March FOMC:

• Rates unchanged: Held steady at 3.50%-3.75% via 11-1 vote.
• Openness to hikes: Minutes reveal growing...

Surprise labor weakening: Employers cut 92,000 jobs in February, unemployment hits 4.4%—vs. economists' growth forecasts.

• Broad hits: Healthcare...

Downward pressure hits the dollar as markets anticipate the Fed's monetary policy decision and Jerome Powell's press conference—the key event of the day.

Federal Reserve makes first rate cut of 25 basis points, lowering federal funds target to 4.00%-4.25%—markets react with hope and caution.

Strong Manufacturing Data

• 🔥 Empire State Index: Empire State Manufacturing Index rose to 11.0 in April versus -2.0 consensus and -0.20 in...

Empire State Index surges to +11.0 in April vs -0.5/-2.0 expected, up from March's -0.2. Softer import prices (+0.8% vs +2.0% exp) align with recent PPI – resilient data bolstering hawkish Fed hold.

Dow Jones dropped Tuesday after surprise CPI inflation report, heightening volatility as key Fed indicator surprises markets. UnitedHealth plunged after suspending 2025 outlook.

Goldman Sachs analysts argue Fed interest rate hikes are much less likely than the 45% probability priced into markets. A dovish bank view contrasting hike risks.

• Dovish push: Fed could still cut rates this year, with expectations shaping borrowing costs, mortgages, markets, and job growth.
• Data surprise:...

Prolonged restrictive policy in focus:

• Deutsche Bank sees Fed holding rates through 2026, with markets pricing 69% odds of no cuts by year-end...

• Iran tensions drove oil higher, lifting US 10yr yields +4bps early week amid easing delay fears.
• Softer-than-ex PPI (0.5% vs 1.1% exp) and...

Key takeaways from high-frequency data:

• All major economic timeframes remain positive, with strong bond spreads and stocks.
• Oil retreats;...

Key angles on war risks to Fed policy:

• Fed minutes hawkish tilt: Some officials want rate hikes on table amid stubborn inflation amplified by Iran...

Key March PPI takeaways signaling nuanced inflation for Fed:

• Headline YoY: +4.0% vs. expected 4.6%, up from Feb's 3.4%
• Core MoM: +0.22% to 152.46 from 152.13
• Implication: Cooler-than-expected pressures amid sticky core gains – watch FOMC reaction.

The Fed releases annual year-on-year (YoY) growth rate estimates for core PCE every quarter—in March, June, September, and December. Key for tracking inflation trends that sway markets.

Geopolitical risks from Middle East conflict now link to 15% US recession odds by 2026.

• IMF forecasts 3.1% global GDP growth for 2026 under limited...

Waller's Remarks on Rates and Risks

• 🔥 Rate cuts possible if war ends quickly: Fed Governor Waller stated rate cuts are still possible this year...