Core Viewpoint - The chief economist of Annex Wealth Management, Brian Jacobsen, suggests that as long as the breakeven inflation rate and other market-based inflation expectations remain manageable, the Federal Reserve should have sufficient confidence to restart interest rate cuts in September [1] Group 1 - The Federal Reserve's potential decision to cut interest rates is contingent on inflation indicators [1] - Breakeven inflation rates are a key factor in assessing the Fed's monetary policy direction [1] - Market-based inflation expectations play a crucial role in the Fed's confidence regarding interest rate adjustments [1]

Core Viewpoint - The financial markets are actively seeking "Powell hedge" strategies in response to Trump's threats to dismiss Federal Reserve Chairman Jerome Powell, indicating growing concerns over the independence of the Fed and potential inflation risks [1][4]. Group 1: Market Reactions - Wall Street is advised to buy 2-year Treasury bonds and sell 10-year Treasury bonds as a hedge against the risks associated with Powell's potential dismissal [1]. - The probability of Powell leaving office by 2025 has increased from 18% to 22% according to Polymarket [1]. - Long-term Treasury yields spiked following news of Trump's potential actions, with the 30-year Treasury yield rising by 11 basis points in less than an hour [1]. Group 2: Investment Strategies - The "Powell hedge" strategy focuses on the potential shift in Federal Reserve policy, with expectations that a new chair could favor rate cuts under White House pressure, leading to a steepening yield curve [1][2]. - Investors are also considering inflation expectations as a more effective hedge, with Bank of America strategists highlighting the importance of inflation-linked securities [2]. Group 3: Internal Fed Dynamics - There is increasing uncertainty within the Federal Reserve, with one-third of respondents in a survey indicating that Governor Waller is a preferred successor to Powell [3]. - Waller has suggested that he would oppose a vote to maintain interest rates if the FOMC decides to do so in the upcoming meeting [4]. Group 4: Future Outlook - The upcoming quarterly refinancing announcement from the Treasury on July 30 will be a key focus for investors, as it may impact the effectiveness of the steepening yield curve strategy [4].

Group 1 - The Federal Reserve is unlikely to cut short-term interest rates due to pressure from President Trump, which could damage its reputation and investor confidence in U.S. Treasury bonds [1] - Financial markets expect the Federal Reserve to maintain short-term interest rates in the upcoming meetings, with potential cuts not anticipated until July, possibly by only 25 basis points [1] - Trump's criticism of the Federal Reserve and his potential appointment of Powell's successor are causing investor anxiety, leading to a sell-off of bonds by foreign investors [3] Group 2 - Inflation expectations are declining, with the five-year breakeven inflation rate dropping to 2.33%, down from over 2.6% in February [2] - Economic uncertainty caused by Trump's tariff measures has led to a significant downgrade in the Atlanta Fed's second-quarter growth forecast from 2.4% to 1.1% [3] - The current yield on 10-year U.S. Treasuries is approximately 4.33%, while the 30-year fixed mortgage rate is at 6.76%, higher than last summer [3]