Fed interest rate cuts more likely at end of 2025, says PIMCO's Jerome Schneider

Fed's Stance and Market Interpretation - The market views future tariff uncertainty and negative aspects differently than Fed officials and economists [2] - The market's perspective may have influenced some Fed members' views on the economy's stability and future outlook [2] - Fed officials are primarily focused on economic data, particularly the resilience of the job sector and inflation rates exceeding the Fed's target [3] - The Fed intends to maintain optionality, suggesting potential rate cuts later in the year or in 2026, contingent on data indicating a softening job cycle [4] Inflation and Tariffs - Inflation hasn't significantly changed in the past year and remains below the 2% target [6] - PIMCO anticipates CPI core inflation potentially rising to 35% by the end of the year [8] - Tariff implications are a factor influencing inflation, but the removal of deflationary impacts from earlier in the year also contributes to upward momentum [8] Investment Strategy - Investors should focus on attractive real yields in the front end of the yield curve, despite inflationary concerns [10] - The key question for investors is the outlook for the longer end of the yield curve [10]