Goodwin: The Fed will do as little as possible for as long as possible

Fed Policy & Interest Rates - The CNBC Fed survey projects the Fed funds rate to be at 389% by the end of the year [1] - The base case expectation is that the Fed will cut rates one to two times this year, aligning with the Fed's communication [2] - The Fed's policy statement is expected to remain unchanged, with any news potentially emerging from the statement of economic projections [3] - The Fed is expected to maintain its current stance, awaiting further data to clarify inflation expectations [7] Economic Uncertainty & Geopolitical Factors - There's increased uncertainty due to the Middle East situation, reciprocal tariffs, and unclear US-China relations [4][5] - Geopolitics is playing a bigger role in inflation expectations [6] - The Fed's tools are limited in addressing changes in trade policy, the political environment, and geopolitical factors [6] US Dollar & Treasury Market - The dollar has shown weakness, with a temporary rebound as a flight to safety [8] - Foreign buyers have reduced their holdings of US Treasuries, decreasing from 50% to 30% over the past decade [8] - Dollar depreciation is anticipated to continue marginally, with treasury market volatility expected, especially in the long end [13] Investor Sentiment & Market Dynamics - Investors, including sophisticated institutional investors, are questioning their geographic allocation to US assets [10] - The depth and liquidity of US markets, including treasuries, the dollar, and private assets, remain robust [11] - There is still no alternative to the US dollar [12] - A transition is occurring that matters for flows and valuations, but it is marginal from a geopolitical perspective at the moment [12]