Despite the pressure of the President on Jerome Powell and the Fed to lower the basic rate, it seems that Donald Trump himself is the greatest obstacle to such a step.
Since winning the oval office President Trump pushed Powell ahead And the Federal Open Market Committee (FOMC) to reduce the interest rate from 4.25 to 4.5%again and again.
Despite the president’s anger, Powell has so far refused to do so. Indeed, analysts suspect that this will continue to be the case in view of the continuing uncertainty about the basics of the American economy.
Has tariff uncertainty was cited by the FOMC as a deterrent from cutting. The reasoning of the FOMC is that the inflationary effects of the economic sanctions are not yet known. Keeping inflation under control is one of the mandates of the Fed.
As such, Elective members may have decided to see how consumers and companies react In order to completely bring the tariffs into play before the basic rate is reduced, a lower rate could lead to increased economic activity – and the prices are even higher.
Last week Trump contributed little to consolidate America’s position in tariffs. After the end of the 90-day break, which was announced after the “Liberation Day” in April, the The president again put the deadline for business on August 1st.
The proposed tariffs are also shifting from day by day for the nations that have not yet concluded a contract with the United States Failed significantly over the 20% a few months ago.
Overnight president Trump shared a number of letters sent to foreign governments, the sanctions with which they are confronted because they do not agree to a deal. According to a post, Japan and South Korea are exposed to 25% of the president of the president of all goods, while Laos and Myanmar will have 40% duties.
American investors were apparently not enthusiastic about the updates from the Oval Office. The S&P 500 fell by 0.8% yesterday that Nasdaq 0.9% and the Dow Jones down 0.9%. S&P Futures Contracts were flat this morning, Premarket.
Although Asia was hit hard by Trump’s trade compensation efforts, Asia remained relatively flat this morning. The Nifty 50 and Nikkei 225 shaped a lean thrust while Hong Kong’s slope rose by more than one point.
Europe, perhaps deaf for the threats from the Atlantic, also remained relatively quiet with London’s FTSE and Germany’s Dax, which marked minor profits.
The UBS -Analyst Paul Donovan suggested that Archy believe that Trump’s foreign markets no longer believe: “It seems to be a wasted effort to analyze every social media contribution from Trump if investors understandably expect future retreats,” he said in a note this morning.
An argument for delay
The anger that approached Trump closer to Trump is that the changing tariff expectations will not help to convince Powell.
As Jim Reid from Deutsche Bank wrote in a note Assets This morning: “After sending the contributions, the President signed an executive regulation that effectively delayed the new collective bargaining prices by August 1, extended the current tariff rate of 10% and gave the nations more time to meet the trade requirements of the White House.
“The President continued to signal that he was open to business and said the deadline of August 1 was ‘not 100% firm’ and they could ‘adapt a little depending on the’.”
Reid continued: “As (advisor to the White House) Peter Navarro in a Substack post, the politician of the chairman Powell prompted American households” acute financial pain “if Powell ‘does not voluntarily adjust the course, the board must act as a determined manner to prevent further economic damage.”
“The recent tariff letters and the fact that the deadlines seem to be pushing to August 1st means that an extension of uncertainty means that a fed September becomes more difficult, unless there is strong indications of an deteriorating economy.”
Reduce expectations
On the contrary, Goldman Sachs increased its prospects for the S&P last night in all 3, 6 and 12-month forecasts, by +3% (to 6400), +6% (up to 6600) or +11% (up to 6900).
The equity team argued: “Earlier and deeper income for loosening and lower bonds than previously expected to look at continuous strength of the greatest stocks and the willingness of investors to look at probably short-term prize weaknesses support our revised S&P 500-striker P/e-forecasts of 22x (from 20.4x). Our former index targets were 5900 and 6500 and 6500, 6500, and 6500, 6500, and 6500, 6500, and 6500, 6500, and 6500, 6500, and 6500, and 6500, and 6500, and 6500, and 6500, “. “.
They added: “The revised FED forecast of the economists calls for three consecutive 25 BP cuts this year, followed by two further quarterly cuts in 2026.”
Here is a snapshot of the campaign in front of the opening bell in New York:
- S&P Futures were flat this morning.
- The S&P 500 index lost 0.79% yesterday.
- South Korea’s Kospi rose by 1.81%this morning.
- Hong Kongs Hang Seng rose by 1%.
- China’s CSI 300 rose by 0.84%.
- Japan’s Nikkei 225 rose by 0.26%.
- The British FTSE 100 was flat in early trade.
- Bitcoin sits at 108,000 US dollars.
- Stoxx Europe 600 had dropped slightly in early trade.
