Mohamed El-Erian: Powell needs to resign to maintain the Fed's autonomy
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The Hill
29 minutes ago
- The Hill
Asian shares mostly slip as focus shifts to US talks with China
TOKYO (AP) — Asian shares mostly declined Tuesday as some of the euphoria fizzled out over a tariff deal with Japan as proposed by President Donald Trump, which was followed by a similar deal with the European Union. Japan's benchmark Nikkei 225 slipped nearly 0.7% to 40,725.23. Australia's S&P/ASX 200 lost 0.3% to 8,670.50. South Korea's Kospi was little changed after reversing earlier losses, edging less than 0.1% higher to 3,212.59. Hong Kong's Hang Seng dropped 1.1% to 25,276.36, while the Shanghai Composite shed 0.3% to 3,586.93. Analysts said markets were watching for the latest from Trump, which are now focused on the talks with China. U.S. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng were meeting in Sweden. Bessent has said the negotiations will likely lead to an extension of current tariff levels. There was no significant new information after the first day of talks. 'Aside from addressing economic imbalances, tariffs are also now well entrenched in the geo-political arena,' Tan Boon Heng of the Asia & Oceania Treasury Department at Mizuho Bank said in a commentary. Last week, Trump announced a trade framework, placing a 15% tax on goods imported from Japan, a level far lower than the earlier 25% rate that the president had indicated. Trump also said Japan would invest $550 billion into the U.S. and open up to U.S. autos and rice. Details are still unclear, but the accord set off some momentary relief. U.S. stock indexes drifted through a quiet Monday after the United States agreed to tax cars and other products coming from the European Union at a 15% rate, lower than Trump had threatened. Many details of the trade deal are still to be worked out, and Wall Street is heading into a week full of potential flashpoints that could shake markets, including an interest rate decision Wednesday by the Federal Reserve. The widespread expectation on Wall Street is that Fed officials will wait until September to resume cutting interest rates, though a couple of Trump's appointees could dissent in the vote. The Fed has been on hold with interest rates this year since cutting them several times at the end of 2024. On Wall Street, the S&P 500 was nearly flat, edging up by less than 0.1% to 6,389.77 and setting an all-time high for a sixth straight day. The Dow Jones Industrial Average dipped 0.1% to 44,837.56, while the Nasdaq composite added 0.3% to its own record, closing at 21,178.58. Tesla rose 3% after its CEO, Elon Musk, said it had signed a deal with Samsung Electronics that could be worth more than $16.5 billion to provide computer chips for the electric-vehicle company. Samsung's stock in South Korea jumped 6.8%. Other companies in the chip and artificial-intelligence industries were strong, continuing their run from last week after Alphabet said it was increasing its spending on AI chips and other investments to $85 billion this year. Chip company Advanced Micro Devices rose 4.3%, and server-maker Super Micro Computer climbed 10.2%. But an 8.3% drop for Revvity helped to keep the market in check. The company in the life sciences and diagnostics businesses reported a stronger profit for the latest quarter than Wall Street expected, but its forecast for full year profit disappointed analysts. Companies are broadly under pressure to deliver solid growth in profits following big jumps in their stock prices the last few months. Much of the gain was due to hopes that Trump would walk back some of his stiff proposed tariffs, and critics say the U.S. stock market looks expensive unless companies will produce bigger profits. Hundreds of U.S. companies are lined up to report how much profit they made during the spring, with nearly a third of the businesses in the S&P 500 index scheduled to deliver updates. In energy trading, benchmark U.S. crude inched up 1 cent to $66.72 a barrel. Brent crude, the international standard, added 6 cents to $70.10 a barrel. In currency trading, the U.S. dollar rose to 148.56 Japanse yen from 148.54 yen. The euro cost $1.1600, up from $1.1593.
Miami Herald
3 hours ago
- Miami Herald
Veteran Fed watcher drops bold message about future interest rate cuts
One thing we know for sure: Interest rates will come down. The question is when. Don't miss the move: Subscribe to TheStreet's free daily newsletter The Federal Reserve's 12-member monetary policymaking panel is known as the Federal Open Market Committee. It meets July 29-30 to vote whether to cut interest rates for the first time this year. Many economists and market analysts expect the FOMC to hold interest rates steady. But expectations are growing that the next rate cut will come sooner than later. Image source:The implications of an interest rate cut are substantial for every American consumer, business and investor. It will lower the cost of borrowing money. Recent FOMC meetings have seen the Fed maintain the Federal Funds Rate within its target range of 4.25% to 4.50%. This "wait-and-see" approach, per Federal Reserve Chair Jerome Powell, reflects a cautious stance in a post-pandemic economy marked by persistent inflation and ongoing geopolitical uncertainties, including the impact of tariffs. The FOMC makes all decisions regarding the appropriate position or "stance" of monetary policy to help move the economy toward these congressionally mandated goals of maximum employment and price stability. Related: White House tours Fed seeking fraud It uses interest rates as a tool to manage that dual mandate. The Federal Funds Rate is the price the Fed charges U.S. banks to borrow money overnight. This in turn sets the pace for short-term costs of borrowing money like credit cards and auto and student loans. The 10-year Treasury Bond yield is the benchmark for longer-term interest rates like the 30-year fixed mortgage, currently hovering around 6.8%. President Trump, who made a rare visit to the independent central bank on July 24, has been pushing for a 3% rate cut for weeks. He and his White House team say the current interest rates are holding back the American economy from robust growth, especially in the housing market. Three things to watch as the FOMC meets The CME Group's widely respected FedWatch tool says there is a 3.1% chance the FOMC will cut the Federal Funds Rate this week. Robert Conzo, CFP, is the CEO and managing director of The Wealth Alliance, a registered investment advisory firm. More Economic Analysis: GOP plan to remove Fed Chair Powell escalatesFederal Reserve official gives green light to July rate cutTrump deflects reports on firing Fed Chair Powell 'soon'Former Federal Reserve official sends bold message on 'regime change' He offers the following "three things to know" for consumers and businesses ahead of the FOMC meeting: The consensus view is that the Fed will hold interest rates steady in its July meeting; however, there seems to be a push for a signal cut of .25% among economists, and even some Fed board members. We will be watching whether the July hold is unanimous, or if one or two members week is important for the Fed's direction moving forward, which may be influenced by a multitude of data coming out this week, including second-quarter earnings, core personal consumption expenditures for June (the Fed's preferred measure of inflation), and the U.S. jobs report for the month of July. These key metrics can help determine future interest rate tariff negotiations and benign inflation concerns bode well for future rate cuts. Trump recently announced a framework for the EU's tariff policy; this, coupled with moderating CPI and PCE, are becoming a battle cry for those who want a signal cut of .25%. Should the Fed surprise markets with an interest rate cut this week, the impact on consumers would be significant and generally positive, primarily by lowering borrowing costs. Related: Former Fed Chair sends stern message on economy, Fed Here's a breakdown of key areas: Mortgage Rates: While fixed-rate mortgages don't directly track the Federal Funds Rate, a Fed cut often influences the broader interest rate environment, including long-term Treasury yields that impact mortgage rates. Adjustable-rate mortgages (ARMs) and home equity lines of credit (HELOCs) are more directly linked and would likely see their interest payments decrease, offering financial relief to homeowners. This could also provide a much-needed boost to the housing market, making homes more Card Debt: For consumers carrying variable-rate credit card balances, a Fed rate cut would typically lead to lower interest charges. This can translate into an opportunity to pay down debt more Loans: Financing new and used car purchases would also become cheaper, potentially stimulating demand in the automotive sector. Savings Accounts and CDs: Sorry, savers, you're likely to see less favorable returns on savings accounts, money market accounts, and certificates of deposit (CDs). They tend to fall when the Fed cuts rates. Overall Economic Activity: Lower borrowing costs encourage businesses to invest and expand, potentially leading to job creation and wage growth. For consumers, increased disposable income from lower debt payments might translate into higher spending on goods and services, a key driver of economic growth. Related: Tariff uncertainty resets inflation, July interest rate cut bets The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.
Yahoo
4 hours ago
- Yahoo
Dollar Rallies as Euro Slumps on the EU-US Trade Deal
The dollar index (DXY00) on Monday rose sharply by +1.03% to a 1-week high. The dollar rallied Monday as global trade tensions eased following the EU and US agreeing to a trade deal, and reports that China and the US are set to extend their trade truce by another three months. The dollar also garnered support as the euro weakened, as the EU-US trade deal is seen as favoring the US. In addition, expectations for the Fed to keep interest rates unchanged at the end of Wednesday's 2-day FOMC meeting are supportive of the dollar. The dollar extended its gains after the Jul Dallas Fed manufacturing outlook survey rose more than expected to a 6-month high. The US Jul Dallas Fed manufacturing outlook survey rose +13.6 to a 6-month high of 0.9, stronger than expectations of -9.0. More News from Barchart Dollar Rises as the EU and US Agree on a Trade Deal America's $37 Trillion Debt Now Takes Venmo: Should Investors Be Worried? Stop Missing Market Moves: Get the FREE Barchart Brief – your midday dose of stock movers, trending sectors, and actionable trade ideas, delivered right to your inbox. Sign Up Now! The European Union (EU) and the US reached a trade deal on Sunday, which will see the EU face 15% tariffs on most of its exports, lower than the previous threats from President Trump of tariffs as high as 50%. Federal funds futures prices are discounting the chances for a -25 bp rate cut at 3% at the Tue/Wed FOMC meeting and 66% at the following meeting on September 16-17. EUR/USD (^EURUSD) on Monday sold off sharply by -1.29% and posted a 1-week low. The euro was under pressure Monday as the announced EU-US trade deal was seen as favoring the US, with 15% tariffs imposed on most EU goods, which could pose headwinds to the Eurozone economy due to the higher tariffs. Monday's hawkish comments from ECB Governing Council member Kazimir were supportive of the euro, as he stated that the ECB shouldn't cut interest rates in September unless there's evidence of a major deterioration in the economy. Swaps are pricing in a 17% chance of a -25 bp rate cut by the ECB at the September 11 policy meeting. USD/JPY (^USDJPY) Monday rose by +0.59%. The yen fell to a 1-week low against the dollar Monday as the EU-US trade deal has eased global trade tensions and reduced safe-haven demand for the yen. Higher T-note yields on Monday were also bearish for the yen. The yen garnered some support Monday after Prime Minister Ishiba insisted he would stay on as Prime Minister despite his LDP party losing its majority in the July 20 upper house elections. The yen continues to be undercut by concerns that the LDP's loss of its majority in Japan's upper house in the July 20 elections may lead to fiscal deterioration in Japan's government finances, as the government boosts spending and implements tax cuts. August gold (GCQ25) on Monday closed down -25.60 (-0.77%), and September silver (SIU25) closed down -0.144 (-0.38%). Precious metals retreated on Monday, with gold falling to a 2.5-week low and silver posting a 1-week low. Monday's rally in the dollar index to a 1-week high was bearish for metals. Easing global trade tensions also undercut safe-haven demand for precious metals after the EU and US agreed to a trade deal and following the South China Morning Post's report that China and the US are set to extend their trade truce by another three months. In addition, hawkish comments on Monday from ECB Governing Council member Kazimir undercut precious metals when he said he favors the ECB holding interest rates steady at the September policy meeting. Finally, higher T-note yields on Monday weighed on precious metals. Precious metals continue to receive safe-haven support from geopolitical risks, including the conflicts in Ukraine and the Middle East. Fund buying of precious metals continues to support prices after gold holdings in ETFs rose to a two-year high last Friday, and silver holdings in ETFs reached a three-year high on the same day. On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
