Battle between Trump and Powell to CUT US Interest Rates

Interest-Rates / US Interest Rates May 07, 2025 - 04:32 AM GMT

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5th May 2025:

FOMC Wednesday Incoming...

Battle between Trump and Powell to CUT US interest Rates.

Fed won't cut because US Jobs were too strong and tariffs inflation is in the pipeline that will see CPI spike so alls a rate cut would signal is even higher inflation, CME Watch at 97% backs up expectations for a rates hold.

Money continues to flow out of the US into Japanese and Euro bonds as evidence by the weak dollar and rising US bond yields so I continue to trim into the stocks rally as opps come along via limit orders, current percent cash is approx 20.4%, by S&P6000 will probably be at around 24% cash, Mondays smallish sells in Flex, TSM, roblox, MSFT, META, WDC, Arrow, AXP via limits.

$9 trillion of US Debt needs refinancing so the US does need lower interest rates which means the Fed is waiting for a REASON to cut rates as acting without a reason would induce panic. Gold price action implies a panic event is being discounted i.e. Gold acting as a safe haven in times of maximum uncertainty.

The great irony is if the Fed cuts interest rates now then the bond yields will likely spike higher, i.e. 2 year spike above 10 year to invert the yield curve which would signal a recession due to higher inflation expectations AND economic contraction. So a rate cut now would be BAD NEWS for stocks which if it happens I am sure would confuse most as to why are stocks falling following a rate cut, so the Fed won't cut rates which ironically should be good for stocks where the S&P next needs to break above 5700 to target 5850 a break of which would target 6000+ that remains doable.

Meanwhile Tariffs chaos continues with next sector for Trump to destroy being Hollywood, which wouldn't be so bad i.e. less propaganda.

Your trim the rally analyst

Nadeem Walayat

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By Nadeem Walayat

http://www.marketoracle.co.uk

Nadeem Walayat has over 35 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

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