Latest news with #MinneapolisFed
Yahoo
27-06-2025
- Business
- Yahoo
Dollar Supported and Gold Prices Sink on Trade Deal Optimism
The dollar index (DXY00) today is up slightly by +0.07%. Positive trade news is bullish for the dollar as the US moves closer to trade deals with China and other trading partners. The dollar also found support after the US May core PCE price index, the Fed's preferred gauge of underlying inflation, rose more than expected, a hawkish factor for Fed policy. In addition, an upward revision to the University of Michigan's US June consumer sentiment index is supportive of the dollar. Gains in the dollar are limited from today's weaker-than-expected US May personal spending and income reports. Also, dovish comments from Minneapolis Fed President Kashkari weighed on the dollar when he said he sees two 25 bp Fed rate cuts this year. Dollar Falls to 3-1/4 Year Low as President Trump Looks to Fast-Track His Pick for New Fed Chair What's Driving Platinum? Dollar Supported and Gold Prices Sink on Trade Deal Optimism Get exclusive insights with the FREE Barchart Brief newsletter. Subscribe now for quick, incisive midday market analysis you won't find anywhere else. US May personal spending unexpectedly fell -0.1% m/m, weaker than expectations of a +0.1% m/m increase. May personal income unexpectedly fell -0.5% m/m, weaker than expectations of +0.3% m/m and the biggest decline in more than 3-1/2 years. The US May core PCE price index, the Fed's preferred gauge of underlying inflation, rose +0.2% m/m and +2.7% y/y, stronger than expectations of +0.1% m/m and +2.6% y/y. The University of Michigan US Jun consumer sentiment index was revised upward by +0.2 to 60.7, stronger than expectations of no change at 60.5. The University of Michigan US Jun 1-year inflation expectations were unexpectedly revised lower to 5.0%, weaker than expectations of an upward revision to 5.2%. The 5-10 year inflation expectations were revised downward to 4.0%, weaker than expectations of no change at 4.1%. Minneapolis Fed President Kashkari said he sees two 25-bp Fed rate cuts this year, with the first potentially in September, but warned that tariffs could have a delayed impact on inflation and that policymakers should remain flexible. US Commerce Secretary Lutnick said that the US and China had finalized a trade understanding reached last month in Geneva, including a commitment from China to deliver rare earth materials. China's Commerce Ministry also confirmed the agreement and stated that it will review and approve eligible applications for the export of controlled items, and the US will cancel the restrictive measures taken against China. In addition, Commerce Secretary Lutnick said the White House has imminent plans to reach agreements with a set of 10 major trading partners ahead of a July 9 deadline for reciprocal tariffs. Meanwhile, the Treasury Department announced a deal with G-7 countries that will exclude US companies from some taxes imposed by other countries in exchange for removing the "revenge tax" proposal from President Trump's tax bill. The markets are discounting a 21% chance of a -25 bp rate cut at the July 29-30 FOMC meeting. EUR/USD (^EURUSD) today is up +0.17% at a new 3-3/4 year high. The euro has support today from the stronger-than-expected French Jun CPI report, which is hawkish for ECB policy. Also, higher German bund yields have strengthened the euro's interest rate differentials after the 10-year German bund yield rose to a 1-week high today at 2.606%. The Eurozone Jun economic confidence survey unexpectedly fell -0.8 to 94.0, weaker than expectations of unchanged at 94.8. France Jun CPI (EU harmonized) rose +0.8% y/y, stronger than expectations of +0.7% y/y. Spain Jun CPI (EU harmonized) rose +2.2% y/y, right on expectations. Swaps are pricing in a 7% chance of a -25 bp rate cut by the ECB at the July 24 policy meeting. USD/JPY (^USDJPY) today is up by +0.17%. Weaker-than-expected Japanese economic news is weighing on the yen today, following the unexpected decline in May retail sales and the less-than-expected rise in the Jun Tokyo CPI, which are dovish factors for BOJ policy. Also, today's rally in the Nikkei stock index to a 5-month high has reduced safe-haven demand for the yen. In addition, higher T-note yields today are bearish for the yen. Japan May retail sales unexpectedly fell -0.2% m/m, weaker than expectations of a +0.3% m/m increase. Japan Jun Tokyo CPI rose +3.1% y/y, weaker than expectations of +3.3% y/y. Jun Tokyo CPI ex-fresh food and energy rose +3.1% y/y, weaker than expectations of +3.3% y/y. August gold (GCQ25) today is down -69.50 (-2.08%), and July silver (SIN25) is down by -0.676 (-1.85%). Precious metals today are sharply lower, with gold sliding to a 4-week low. Today's stronger dollar is undercutting metals prices. Also, positive trade news today sparked a rally in stocks that curbed safe-haven demand for precious metals as the US moves closer to trade deals with China and other trading partners. Precious metals remained lower after today's news showed that the US May core PCE price index, the Fed's preferred gauge of underlying inflation, rose more than expected, a hawkish factor for Fed policy. Today's economic news, which showed an unexpected decline in US May personal spending and personal income, is dovish for Fed policy and supportive for precious metals. In addition, dovish comments today from Minneapolis Fed President Kashkari were positive for gold demand as a store of value, as he stated that he sees two 25-bp Fed rate cuts this year. Fund buying of gold continues to support prices after gold holdings in ETFs rose to a 1-3/4 year high Thursday. 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
Yahoo
27-06-2025
- Business
- Yahoo
Fed's Kashkari says more clarity needed on tariffs' impact on inflation
(Reuters) -Recent U.S. inflation data has been "quite positive" but some of the inflationary effect of tariffs may just be delayed, Minneapolis Federal Reserve Bank President Neel Kashkari said on Thursday. "We've been basically saying, Hey, we need to go slow until we have more clarity on what's happening with tariff-related inflation,'" Kashkari said, of how the Fed is looking at interest rate decisions. Businesses are going to pass on as much of the higher costs from tariffs as they can, he told the Montana Chamber of Commerce in Helena, Montana. "We've also heard a lot of businesses saying, Hey, we don't want to pass on cost increases yet because if the tariffs come back down to something more normal, why would we want to anger our customers if it's going to be a temporary thing?" Kashkari said. It's also remarkable, he said, how products often "find their way around and through barriers," a suggestion that he is watching to see if businesses find ways to avoid the biggest tariffs, which could limit the total impact on inflation. At the moment there's a lot of uncertainty and trade negotiations are under way, he said. "We still need to get a better assessment of what impact tariffs are going to have on the economy," he said. "We just don't know yet."
Reuters
27-06-2025
- Business
- Reuters
Fed's Kashkari says more clarity needed on tariffs' impact on inflation
June 26 (Reuters) - Recent U.S. inflation data has been "quite positive" but some of the inflationary effect of tariffs may just be delayed, Minneapolis Federal Reserve Bank President Neel Kashkari said on Thursday. "We've been basically saying, Hey, we need to go slow until we have more clarity on what's happening with tariff-related inflation,'" Kashkari said, of how the Fed is looking at interest rate decisions. Businesses are going to pass on as much of the higher costs from tariffs as they can, he told the Montana Chamber of Commerce in Helena, Montana. "We've also heard a lot of businesses saying, Hey, we don't want to pass on cost increases yet because if the tariffs come back down to something more normal, why would we want to anger our customers if it's going to be a temporary thing?" Kashkari said. It's also remarkable, he said, how products often "find their way around and through barriers," a suggestion that he is watching to see if businesses find ways to avoid the biggest tariffs, which could limit the total impact on inflation. At the moment there's a lot of uncertainty and trade negotiations are under way, he said. "We still need to get a better assessment of what impact tariffs are going to have on the economy," he said. "We just don't know yet."
Bloomberg
24-06-2025
- Business
- Bloomberg
Fed Needs More Clarity on Tariff Impact on Prices, Kashkari Says
Federal Reserve Bank of Minneapolis President Neel Kashkari said the US central bank needs more clarity on how tariffs will impact prices before adjusting policy, even as recent inflation data has been 'quite positive.' 'The last two or three months the inflation data we've been getting has been quite positive, it suggest that the disinflationary path I described has been on track,' Kashkari said Tuesday at an event in La Crosse, Wisconsin. 'But it isn't obvious that we've seen the full effects of the tariffs yet so we've been taking our time to try to get a sense of what's really going on before we made any dramatic changes in our policy outlook.'
Mint
18-06-2025
- Business
- Mint
The problem with Wall Street's fixation on the Fed dot plot
On the eve of Wednesday's Federal Reserve decision, traders, economists and central-bank watchers across Wall Street are fixated on a single, perplexing question: Will the median of 19 policymakers project one or two rate cuts in 2025? The amount of attention on the Fed's 'dot plot' partly reflects the lack of suspense for a meeting at which interest rates are widely expected to be left alone. Still, the focus borders on the absurd given the high degree of uncertainty behind the economic forecast upon which officials build these quarterly interest-rate projections. It illustrates why some officials are ready to give the exercise a rethink. The Fed releases a dot plot at every other meeting. Each dot on a matrix grid represents one official's rate projection for the end of the year under appropriate interest-rate policy. Whether the median of those dots shows one cut or two might matter enormously to markets. But 2024 illustrated that the zealous attention placed on small shifts in the median rate projection isn't always a useful guide to the economic outlook or the Fed's reaction to incoming data. Consider: At the Fed's June 2024 meeting, the median interest-rate projection for the year moved to a single, quarter-point cut, down from three in March 2024. The Fed subsequently proceeded to deliver 1 percentage point in rate cuts beginning in September, with a half-point rate cut at that meeting. This past March's fairly narrow distribution—four officials penciled in zero cuts; another four put down one; nine wrote down two cuts; and two of them projected three cuts—left the median projection at two cuts. The median could drop to one from two if just a couple of officials revise in that direction this week. The upshot is that a seemingly small shift could reshape the Fed policy narrative for the summer. The dot plot has been useful at times where the economic outlook was relatively straightforward but causes confusion when the Fed reacts to unexpected outcomes. 'You're having to make, essentially, forecasts that people take very seriously, and you can't communicate just how uncertain you really are, because you have to put these handful of dots down,' Minneapolis Fed President Neel Kashkari said last year. Fed Chair Jerome Powell and his colleagues frequently remind audiences that the dot plot, part of a broader 'Summary of Economic Projections,' isn't an agreed-upon plan or promise. Market participants often still treat it as a commitment. 'Most of the time, I really regret having to fill out the SEP,' Kashkari said at a Fed conference last month. 'Once in a while, I'm really glad we have the SEP.' This week's meeting threatens to become Exhibit A in the case against dot-plot precision. It could animate a broader discussion officials are poised to take up later this year about their overarching communications tools. The dot plot was introduced in 2012. With rates pinned near zero, officials wanted to provide extra stimulus by showing they would keep rates lower for longer than many investors anticipated. Powell more recently has indicated that officials could weigh potential refinements to their communications, part of a continuing review of the Fed's policy framework. Some think the dot plot outlived its original purpose long ago and is ripe for revision. Supporters of the dot plot decry any loss of transparency. Critics say transparency isn't worthwhile if it confuses as often as it informs. One middle-ground option would be to stop publishing the dot plot and the median projection. Instead, the Fed could continue releasing the full range of officials' rate projections along with the 'central tendency,' which removes the three highest and lowest projections. The central tendency, in particular, conveys much of the same information as the dot plot but without generating the spurious sense of certainty from investors' intense focus on medians. Tariffs make this week's projections fraught. The central bank's last projections were released before President Trump's 'Liberation Day' tariff announcement on April 2. The case for officials to continue to lower their rate-cut projections for 2025 is simple: Higher taxes on imported goods have introduced new risks of higher inflation to the outlook. As officials raise their inflation forecast, they will grow less confident in their ability to lower rates in the time frame they previously expected. At the same time, the outlook for where tariffs will settle and how businesses will pass through potential cost increases remains highly uncertain. The labor market looks a touch softer than it did a few months ago. The argument for holding the rate projections steady is that any changes provide a feigned specificity regarding a rapidly shifting outlook. That was the explanation Powell offered in March. The unchanged median rate projection at that meeting was a function of 'just really high uncertainty,' he said. 'What would you write down?' Write to Nick Timiraos at
