Economic Outlook & Monetary Policy - The Fed previously adopted a "wait and see" approach regarding tariffs, but now believes their impact is likely to be a one-off event [2] - The market anticipates a potential softening of the labor market, evidenced by labor market revisions [4] - The Fed's policy decisions are influenced by revisions to employment numbers and forecasts of the labor market's future trajectory [8] - The Fed is reducing its balance sheet and is closely monitoring markets for disruptions, with the pace potentially slowing if the economy weakens [12][13] Labor Market Dynamics - A significant portion, approaching half, of the unemployed have been out of work for 15 weeks or more, indicating a core group facing difficulty in finding employment [9] - There are concerns that the job market could deteriorate, particularly when considering unemployment rates for teenagers and those in their early 20s [10] - The impact of technology on the job market is still uncertain, with conflicting reports on its effects on coding and other opportunities [11] Inflation & Interest Rates - The Fed is closer to full employment than its inflation target, leading to a cautious approach of holding rates at a slightly restrictive level [6] - The market anticipates that PCE data will not show a significant flare-up in inflation [7] - The Fed is becoming more forward-leaning on interest rate cuts [9]

Summary of Deutsche Bank Group Research on Japan Economic Perspectives Industry/Company Involved - **Industry**: Japanese Economy - **Company**: Deutsche Bank Group Key Points and Arguments Economic Growth Forecasts - The growth forecast for fiscal 2025 has been revised upward from 0.6% to 1.0% based on 2Q 2025 GDP figures, which showed a real GDP growth rate of 1.0% saar, exceeding market consensus of 0.3% [4][5] - The forecast for fiscal 2026 has been revised downward from 1.1% to 0.9% [4][5] - Growth forecasts continue to exceed consensus estimates [5] Tariff Negotiations and Economic Impact - Reciprocal tariffs with the US will be raised to 15%, while tariffs on automobiles will be lowered [4][9] - The impact of the US tariff increase on the real economy has been limited so far, with no significant change in export volumes to the US [10] - The expected impact on growth rates due to tariff changes is -0.1% for fiscal 2025 and 2026 [9] Inflation and Consumption Trends - Despite high inflation, real private consumption is on a moderate upward trend, primarily due to increases in real employee compensation [15] - Real employee compensation remains below pre-pandemic levels, with a significant negative real wage gap of about -4% in 2Q 2025 [15][23] - Inflation is expected to decelerate moderately but is unlikely to fall significantly below 2% [23] Monetary Policy Outlook - No significant changes in the Bank of Japan's (BoJ) stance on interest rate hikes are expected unless Takaichi becomes prime minister [4][46] - An interest rate hike is anticipated in October, influenced by the political calendar and economic measures [46][47] Political Landscape and Future Cooperation - The political situation will be influenced by the outcome of the Liberal Democratic Party (LDP) presidential election, with potential cooperation with opposition parties depending on the outcome [38][42] - If Prime Minister Ishiba remains in office, cooperation with the Japan Innovation Party (Ishin) or the Constitutional Democratic Party (CDP) is likely [38][42] Fiscal Policy Uncertainty - High uncertainty exists regarding future economic measures, with a placeholder assumption of a supplementary budget of about 15 trillion yen [34] - Further increases in defense spending sought by the US government are not reflected in the current economic outlook [34] Employment and Wage Dynamics - The number of employees has increased at an annual rate of about 0.7-0.8%, contributing to the rise in real employee compensation [15] - Nominal wage increases of at least 3% are deemed necessary to address the negative real wage gap [15] Long-term Economic Policy Trends - The long-term trend in economic policy is shifting from monetary policy to fiscal policy, focusing more on household-oriented policies rather than corporate-oriented ones [45][42] Other Important Content - The presence of a Liberal Democratic Party presidential election will significantly influence future political cooperation and economic policy direction [38][42] - The economic measures and their scale will be critical in shaping the economic outlook, with potential implications for fiscal policy and public sentiment regarding inflation and consumption [34][23]

Monetary Policy Stance - The policy rate is 100 basis points closer to neutral than a year ago [2] - Policy is not on a preset course and may warrant adjusting [2] - Decisions are based solely on data assessment and its implications for the economic outlook and balance of risks [3] Economic Outlook & Risk Assessment - Near-term inflation risks are tilted to the upside, and employment risks to the downside [1] - The framework calls for balancing both sides of the dual mandate (inflation and employment) [1] - The stability of the unemployment rate allows for careful consideration of policy changes [2]

Monetary Policy Response to Stagflation - The Federal Reserve faces the challenge of responding to stagflationary shocks, such as those potentially caused by tariffs, which have both inflationary and supply-side effects [1] - The Fed aims to mitigate secondary impacts of tariffs, including wage-price spirals and increased production costs for domestic manufacturers due to tariffs on parts, components, supplies, and intermediate goods [1] - Determining which price increases are transitory and which require a policy response is a key task for the Fed [2] Data Dependency and Economic Outlook - Future monetary policy decisions depend on incoming economic data, particularly inflation reports, to gain clarity [3][4] - Strong economic data with inflation trending downwards would support the Fed's decision to lower interest rates to a settling point [3]

Economic Outlook - The Wall Street Journal (WSJ) reporters are analyzing the current economic situation and future expectations [1]

Monetary Policy Stance - The Federal Reserve decided to leave interest rates unchanged, maintaining the range of 425% to 450% [1] - Two governors dissented, favoring a 025% rate cut [1] - It marks the first time since 1993 that two governors have dissented [2] - Nine votes supported keeping rates on hold [2] Economic Assessment - Export fluctuations continue to impact the data [3] - Growth moderated in the first half of the year [3] - Uncertainty about the economic outlook remains elevated [3][4] - The Fed removed "diminished" from the statement, indicating continued high uncertainty [4] - Inflation remains somewhat elevated [4] - Unemployment is low, and the labor market is solid [4] Forward Guidance - The committee has attended to the risks on both sides of the mandate [5] - The statement does not hint at an imminent rate cut in September [5]

Economic Outlook - Singapore's financial sector is projected to experience slower growth in the coming years [1] - Trade and geopolitical tensions are creating uncertainty for Singapore's economic outlook [1] Industry Impact - The trade-dependent nature of Singapore makes it vulnerable to global economic headwinds [1]

Economic Outlook - The economic outlook has brightened a bit, but it's not as rosy as the market looks [1] - Most forecasts still see tariff effects weakening growth and driving inflation higher [2] - The average of 15 forecasts on the street in the CNBC rapid update up almost a percentage point for the second quarter to 25% from 16% in April [2] - The overall year outlook is 13% [3] Inflation and Fed Policy - Average core PCE inflation also came down for the second quarter with what looks to be an expectation of a delayed tariff impact, but it's forecast to shoot up in the third and fourth quarters back towards 3% before settling down next year [4] - Inflation remains a percentage point above and it fuels this debate about whether the Fed should cut now or hold till those numbers start to come down [5] - The Fed's dilemma is weaker growth, but inflation remains relatively high [10] - If the Fed can feel confident that inflation will come down, they could maybe cut a little bit in the back half of this year [11] Tariff Impact - There have been markdowns in the earnings outlook for tariff affected companies [9] - The idea being when you put up GDP numbers that are weaker towards 1%, the theory is that something's got to give in terms of tariffs [8] - It looks like the tariff impact will be a little less, and if we get out of this with a couple quarters of weaker growth, that would be getting off cheap [9]