🔙 What happened last week?
🎈 FOMC Update:
The Fed kept rates steady at 4.25–5.50%
Jerome Powell remained hawkish – uncertainty is high, the economy’s solid, and there’s no urgency to cut rates
The first rate cut is now expected in July, with a 51.1% chance of a cut vs. 40% hold
For 2025, markets are pricing in 3 cuts
🌍 Trade Talks:
The UK became the first country to land a trade deal with the U.S. – a “win-win”, but especially good for the U.S.
Initial U.S.–China trade discussions took place in Geneva under the WTO on May 10th, Trump on Truth Social: “A very good meeting today with China, in Switzerland. Many things discussed, much agreed to. A total reset negotiated in a friendly, but constructive, manner. We want to see, for the good of both China and the U.S., an opening up of China to American business. GREAT PROGRESS MADE!”
Trade Talks will be key going forward as tariff discussions progress
📊 COT Report:
No major positioning changes from big players this week
Market sentiment stays relatively neutral
🔮 Soo…What’s next?
All eyes will be on further trade updates, especially from China. Rumors suggest tariff cuts are on the table – possibly down to 80%.
We also get a busy week of data:
📅 Tuesday:
CPI (Consumer Price Index)
📅 Thursday:
PPI (Producer Price Index)
Retail Sales
📅 Friday:
UoM Consumer Sentiment
UoM Inflation Expectations
Next week will bring key inflation data, starting with the CPI (Consumer Price Index) on Tuesday and followed by the PPI (Producer Price Index) on Thursday. A continued cooling in these numbers could give the Federal Reserve more confidence to consider rate cuts. However, as previously mentioned, this is heavily dependent on trade dynamics and tariffs, which can have a direct impact on consumer prices and corporate profit margins. If tariffs are lowered—especially on Chinese goods—it could ease pressure on input costs and potentially accelerate disinflation.
At the same time, the Fed is gradually shifting focus toward the second pillar of its dual mandate: the labor market. While employment figures still appear relatively stable, there are increasing signs of softness and underlying weakness—such as slowing wage growth and rising jobless claims. If this trend continues, it could further support the case for a more accommodative stance.
Additionally, on Thursday, we'll also get the Retail Sales data, which offers a timely view into consumer behavior and confidence. As I highlighted in my last post, U.S. consumers are still spending at a healthy pace, which continues to act as a backbone for economic growth. However, if we start to see signs of slowing in retail activity, that could be another signal that the broader economy is cooling down.
Trade deals, tariffs, and inflation data will drive the narrative next week. Stay sharp – it’s setting up to be an important week for macro plays 🧠📊
Stay informed and unlock alpha with Gauch-Research. 🚀