"It just doesn't smell right given the strength of the economic data," said Chis Rupkey, chief financial economist at MUFG Union Bank. "The consumer is back in a big way. You really have to ask yourself why they are going to cut rates."
"This really takes the cake in terms of just how strong the consumer is," Rupkey said. "The Fed has their story and they're sticking to it. So despite the data, despite the strong jobs numbers, they believe this is an insurance cut. A risk management cut is necessary for two factors: one is the slowing global economy, and No. 2 is the fact that inflation has been below the 2% target for so long. Given those two factors, I expect them to go.
that falling government bond yields are sending a market signal to the Fed that its funds rate, currently pegged in a range between 2.25% and 2.5%, may be too high., an aggressive easing cycle ahead would run counter to Fed officials' assessment of an otherwise strong economy led by a resilient consumer.
Andrew Hunter, senior U.S. economist at Capital Economics, remains of the outlook that the Fed ultimately will have to ease aggressively, but thinks expectations for a half-point cut in July "look well wide of the mark."
It is not about 'need' it is about politics. If Trump's improved economy can be broken, the costs are worth it.
Pure and simple. Powell is being pressured by our authoritarian leader tRump. sorry, but a rate cut with this economy is ridiculous. IMO
Boy the market rally won't like that. It wants it's cake and to eat it too.
Implies that a steepening happens just prior to the first rate cut(s)
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