Monetary Policy Stance - The industry suggests the Fed might have already implemented one rate cut [1] - The industry notes the Fed's previous Summary of Economic Projections (SEP) in March occurred before the April 2nd tariff announcement [1] - The industry observes the Fed's forecasts indicate a slightly more restrictive policy stance than anticipated in March [1] - The industry believes the Fed made the right decision to hold the funds rate steady, awaiting more clarity [1] Economic Outlook - The industry acknowledges the economy's resilience, citing a strong labor market and rebounding growth after a negative first quarter [1] - The industry recognizes uncertainty regarding the size and effects of tariffs, anticipating higher inflation and weaker growth [1] - The industry expects the budget bill working its way through Congress to influence the economic outlook [1] - The industry highlights the importance of minimizing both the risk and cost of policy mistakes, suggesting it's not costly to hold rates steady given the current economic environment [3] Inflation and Unemployment - The industry indicates tariffs are expected to cause higher inflation, at least temporarily, and slightly higher unemployment [1] - The industry points out that the unemployment rate is low [3] - The industry observes that growth in employment is moderating as expected [4]

Market Sentiment & Economic Outlook - The market is facing a battle between resilience and complacency as the second quarter ends [1] - Some believe the market is resilient and will continue to rise towards all-time highs [2] - Concerns exist about the removal of buybacks and the end of the 90-day tariff extension [3] - The market may react negatively if the dot plot indicates only one rate cut, while two cuts may already be priced in [12] - The market has pure momentum in basically every sector, with strong appetite for IPOs until the second quarter earnings reports [17][18] Monetary Policy & Federal Reserve - The FOMC meeting is anticipated with uncertainty, especially regarding Chairman Powell's stance [3][4] - Some argue that recent weak data points, such as the largest drop in retail sales since March 2023 and poor home builder sentiment, justify a dovish stance [5] - Michigan consumer one-year inflation expectations have decreased from 73% to 53%, which the Fed may consider significant [6][7] - Uncertainty regarding tariffs and the Middle East conflict may prevent the Fed from adopting a dovish position [8][9] - The Fed's own measure of uncertainty is near pandemic and financial crisis levels, suggesting caution [22][23] - The core PCE went up by 03%, Real GDP went down by 04%, and the funds rate kept unchanged at 39% [21][22] Inflation & Tariffs - Looming tariffs and the conflict in the Middle East create uncertainty regarding future oil prices [8] - Inflation readings have been relatively good recently [8] - Inventories not subject to tariffs are dwindling, potentially leading to higher prices [16] - One company's aluminum costs, previously sourced from China, increased by 50%, leading them to source from the US, but costs are still up 35% year-over-year [14]

Housing Market & Disinflation - Housing inventory is at its highest level since 2020, indicating a potential slowdown in demand [3] - Home prices experienced a decrease last month, marking the first decline since January 2023 [4] - John Hancock believes housing disinflation will influence economic data, potentially leading the Fed to cut rates more than anticipated [4] Inflation & Tariffs - The analysis suggests that disinflation, particularly in the service-based economy, might offset the potential inflationary effects of tariffs [6] - Markets are overly focused on potential inflationary impacts of tariffs, while underlying disinflationary trends are being overlooked [2][5] Labor Market & Economic Growth - Initial claims are being closely monitored as indicators of potential cracks in the labor market, with a level approaching 260 signaling a more significant deceleration in growth [7][8] - Economic indicators, such as PMI data, suggest a slowing economy, and leading economic indicators have rolled back over [13] - While a recession is not anticipated, a gradual deceleration in growth is expected, with consumer spending showing signs of pullback [12] Fed Policy & Market Expectations - The Fed may be behind the curve in recognizing disinflationary data, similar to the market's oversight [10] - The bond market is pricing in only one to two rate cuts this year, which is viewed as inconsistent with current economic dynamics [10] - There's a possibility the Fed is already too late in adjusting its policies, potentially leading to more rate cuts than currently expected [9][10] Investment Strategy - John Hancock recommends locking in elevated income through high-quality bonds, given elevated bond yields [8] - The recommended investment strategy for the remainder of 2025 is to focus on income generation through high-quality bonds and dividend-paying stocks [14]

For more on the data in the Fed's policy meeting, we want to bring in Dennis Lockhart. He is former Atlanta Fed president and a distinguished professor of international affairs at Georgia Tech. Uh Dennis, what do you think of of Steve's analysis on this.The idea that yeah, the numbers are bad, but a lot of that was pulled forward. Yeah, I'll associate myself with Steve's analysis there. I think this the pull forward effect is probably showing up in the numbers which uh means that the committee is likely to ...

Let's just scenario play. Yes, please. What happens if Powell rips in a 100 basis point cut.Right now, I'll tell you. So, one part which is mathematical is the interest on the debt goes down. We save 300 billion.But there's something else that happens which is the Fed does control the front end of the curve. Meaning, how do people borrow money for small amounts of time from one day to about two years. If you make that cheaper, it's a test that's true as time.What happens is people borrow more money. that fu ...

Dollar Weakness Drivers - The dollar's longer-term downtrend is driven by cyclical and structural changes, including slowing growth and inflation, and the current account deficit [2][3] - Unexpected softness in inflation data has recently accelerated dollar weakness, shifting expectations towards more aggressive rate cuts from the Federal Reserve next year [3] - Reduction in global demand for assets may be contributing to dollar weakness [4] Market Factors and Events - Upcoming US retail sales report and Federal Reserve rate decision are important news events for the dollar [5] - Potential details on unilateral tariffs from the Trump administration could cause a near-term safe haven bid in the dollar [6] - The Federal Reserve may eventually push the button on rate cuts in Q4 [6] Yen and Central Bank Policy - BOJ (Bank of Japan) has been unpredictable and unconventional, with yen volatility creating trading opportunities [7][8] - Tariffs influenced BOJ's decision-making regarding interest rates [8]

Core Points - The article discusses the expertise of Ernest Hoffman in the field of crypto and market reporting, highlighting his extensive experience and contributions to media and economic news [2] Group 1 - Ernest Hoffman has over 15 years of experience as a writer, editor, broadcaster, and producer [2] - He began working in market news in 2007 and established a fast web-based audio news service [2] - Hoffman produced economic news videos in partnership with MSN and the TMX [2]