Is Trump Right to Criticize Powell?

Is Trump Right to Criticize Powell? We don’t think so, because: – Interest rates are still near zero in real terms and below real GDP – The rise in Fed rates has very few visible negative effects in the USA – And at full employment, GDP returns to the level of potential GDP

GS U.S. Financial Conditions Index

GS U.S. Financial Conditions Index The recent data showing cooler inflation has led to a loosening of financial conditions, instilling confidence in the potential timing of rate cuts by the Federal Reserve. Image: Goldman Sachs Global Investment Research

U.S. Inflation – Core PCE and Core CPI

U.S. Inflation – Core PCE and Core CPI Inflation is trending downward towards the Fed’s 2% target, a crucial aspect of its monetary policy aimed at maintaining price stability and anchoring inflation expectations at a moderate level. Image: BofA Global Research

U.S. Core CPI Inflation

U.S. Core CPI Inflation The June CPI report suggests the price trend is aligning with the Federal Reserve’s goals, leading Goldman Sachs analysts to anticipate the Fed’s first rate cut in September. Image: Goldman Sachs Global Investment Research

Inflation – U.S. CPI Forecasts

Inflation – U.S. CPI Forecasts With inflation high, the Fed’s interest rate cut decisions require a delicate balance between price stability, economic expansion and employment support. Image: BofA Global Investment Strategy

U.S. Government Total Outlays

U.S. Government Total Outlays U.S. federal government spending has risen sharply since the 2020s, sparking debates about fiscal responsibility and the long-term implications for the U.S. economy. Image: BofA Global Investment Strategy

S&P 500 – Indexed Performance

S&P 500 – Indexed Performance Will the S&P 500 continue to track the 1995 analog? In 1995, the Fed cut interest rates, marking the last soft landing in the U.S. economy. Image: Goldman Sachs Global Investment Research

Inflation – PCE Deflator YoY Projections

Inflation – PCE Deflator YoY Projections The Fed faces challenges in managing a rate cut amid high inflation, requiring a delicate balance between inflation control, price stability, and economic growth to support employment. Image: BofA Global Investment Strategy

U.S. 10-Year Treasury Yield Since 1790

U.S. 10-Year Treasury Yield Since 1790 The trajectory and duration of the U.S. bond bear market can be influenced by factors such as inflation, economic growth, and the Federal Reserve’s monetary policy. Image: BofA Global Investment Strategy

Inflation – Potential Paths for U.S. Core CPI

Inflation – Potential Paths for U.S. Core CPI If the Fed cuts rates in June, U.S. core CPI is expected to exceed the Fed’s 2% inflation target, which could pose challenges for the central bank in maintaining price stability. Image: BofA Global Investment Strategy