30/07/2025 Daily Reports
• No rate cut in July
Despite political pressure from President Trump, the Federal Reserve is expected to hold rates steady at the upcoming July 30 meeting.
• Tariff-driven inflation risks ahead
Recent CPI prints have been calm, but tariffs are likely to push inflation higher in July, August, and September, with 0.4–0.5 percent month-on-month spikes expected.
• Jobs market remains firm, but imbalanced
Job gains are largely concentrated in government, hospitality, and healthcare. Key economic sectors like tech, manufacturing, and construction have shown limited growth.
• Inflation expected to cool later in the year
Moderating rents, stable energy prices, and weaker wage growth are likely to contribute to disinflationary pressure going into the fourth quarter.
• September vs. December for first rate cut
While markets are partially pricing a September cut, ING expects the first move to come in December, potentially starting with a 50 basis point cut.
• Increasing pressure on Powell
As Jerome Powell’s term nears its end, Trump may push for a more dovish successor to align with his pro-growth agenda.
• Dollar may stay supported in the near term
Stronger short-term yields and upcoming core PCE and jobs data could offer temporary support for the US dollar, especially against low-yielding currencies.
• What’s Next?
The Fed is cautious after past policy missteps. While inflation may show near-term spikes, the broader economic signals point to a slower economy by year-end. Expect a shift toward easing in December — potentially a bold one — as the Fed regains room to act.
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Fed Stays Put on Rates Under Trump Pressure; Inner House Divisions Unfold; Markets Disregard Ambiguous Trade Arrangements; Foxconn and TECO Form AI Hardware Alliance
• The Federal Reserve is likely to maintain interest rates today, defying strong pressure from President Donald Trump and other White House actors, including his recent rate-cut demands with the release of strong second-quarter GDP data. This comes after public dissent by Trump-nominated Fed Governors Christopher Waller and Michelle Bowman who have voted for a July rate cut, this being a serious internal disagreement within the central bank. Their potential dissent would be a rare occurrence; the first time two governors have voted against the Chair since over three decades.
• Meanwhile, financial markets are still relatively unaffected by recent statements by President Trump of new trade arrangements, even though they have begun with initially vague descriptions and periodic contradicting comments by other groups. Investors are reportedly seeing these agreements, from Europe to Japan and Vietnam, as a sign of growing future stability over the past uncertainty of ongoing negotiations or worse.
• In corporate announcements, Hon Hai Precision Industry Co., Foxconn, a dominant manufacturing partner of Apple and Nvidia, forged a strategic alliance with Teco Electric & Machinery Co. Through a share swap in which Foxconn will take a 10% stake in TECO and TECO a minority stake in Hon Hai, the deal will assist in backing Foxconn’s push into artificial intelligence hardware and AI data center capabilities.
