In the middle of a cloudy view, you will either show good economic assets or a downturn.
On the one hand, the interest rate reductions could mean that the Federal Reserve finally considered that as that Risk of inflation Has after the Tariff-induced uncertainty. This is the result investors and President Donald Trump would be the most welcome. But until one of these uncertainties decreases, the interest rates remain where they are.
However, there is a scenario in which installment cuts are not a sign of excitement of expected relief, but the beginning of a long -lasting downturn. In the event that the job market suddenly goes south, the Fed would have to get in and lower interest. In this case, investors and the president would get more than they said goodbye: an interest rate reduction of 50 basis points.
A shortcut of this size, which is the usual 25 basis points twice as high, would only come if unemployment and the companies would stop later in the year. The Fed started its hold pattern, largely concerned the tariffs of Trump’s tariffs Re -inflate. But unemployment has concentrated more in the past few weeks – the other side of his double mandate. Investors also fear that the labor market may fluctuate.
“We believe that the risk increases that the first average is 50 basis points,” said Nancy Vanden Houten, Leading US economist at Oxford Economics.
In December, the Oxford Economics predicts a single interest rate reduction of 25 basis points. But the fact that the company maintains a jumbo rate for real fears can be quickly and dramatically failed by the labor market. It is the nature of the burglary of labor that is more than anything important.
If it is “unexpectedly on a kind of shock, this would motivate a reduction of 50 base at the end of the year,” said Jose Torres, Senior Economist at Interactive Brokers. “You would need things to get bad very quickly towards the end of the year so that this happens.”
If the bad news is quick and serious, the Fed has to crawl.
“We see a growing risk that the first step is larger, ie 50 basis points Assets.
The current labor market is despite the market turbulence that surrounded the original tariff announcements in April. However, there are some subtle changes under the surface that indicate that it loosens. According to the Bureau of Labor Statistics, the unemployment rate actually reduced 4.1% compared to 4.2% in June. This headlining number – which came together with 147,000 new jobs – was a slowdown of the dynamic on the labor market. The jobs of the private sector grew at the lowest level in eight months. 130,000 people fell from the employment population; And individuals who went out of a job were unemployed longer.
These nuances do not indicate a labor market in direct danger, but to someone who is shifting under the feet of the economy.
“The numbers are not terrible and make it possible for the Fed to concentrate more on inflation,” said Vanden Houten. “The latest data enables the Fed to breathe a little easier, although there were definitely some quirks in the employment data in June that will probably look a little better than you.”
Economic growth would have to be significantly below average below average and a level of attitudes would have to be less than 50,000 per month in October and November, so that the economic image deteriorates quickly enough according to Torres to force a 50 -based point.
The possibilities of both are unlikely to happen at the moment. Investors expect growth and the labor market to slow down later a year, but not at these levels. Wall Street companies and economists reduced their forecasts for the growth of the end of the year and increased those for inflation, with mainly duties being cited. Some have visited these projections again, they continue to lower themHow Trump’s threatening tariff -image threatens.
Nevertheless, the markets have remained stable in the middle of a renewal of Trump’s tariff vertebrae. The markets seem to have the lower forecasts of Wall Street largely for the rest of 2025. In fact, the markets were largely untouched at the beginning of this week when Trump announced a number of new and possibly final tariffs in a variety of countries.
