July Fed Rate Cut Incoming? Here’s Why the Odds Just Skyrocketed

Markets are buzzing as whispers of a July Fed pivot grow louder. Could the era of tightening finally be over?

The case for cuts builds

Inflation's cooling—but Main Street isn't buying the 'soft landing' fairytale. Wall Street's algos? Already front-running the decision.

Rate-cut roulette

Traders pile into short-dated Treasuries while economists debate if Powell will cut 25bps or go full 50. Either way, someone's getting rekt.

Bonus jab: Nothing stimulates the economy like bankers getting their bonus pools back.

In Brief

• Christopher Waller mentions a cut as early as July to prevent deterioration in the employment market.
• Trump lashes out at Powell, demanding a rapid rate reduction to revive the U.S. economy.
• Unsettling weak signals are showing in unemployment indicators across several key sectors of the country.
• The Fed remains divided between strategic caution and perceived urgency in light of the economy’s state.

Christopher Waller, the Maverick Who Stands Out

When a Fed member breaks the unanimity, amid the rate hold, it causes waves. Last Friday, Christopher Waller, one of the influential governors – and– clearly stated: ““. And he insists:

If we start worrying about the employment market, we need to MOVE now, not later.

Waller is not speaking into the void. He notes that, GDP growth is on track, and inflation is following a downward curve. But then, why are?

While Waller advocates economic clarity, others – like Mary Daly – prefer to wait until autumn. She calls to “gather more information” before acting. The result:

In this monetary cacophony, everyone interprets the figures their own way. But one thing is certain:, and his opinion is beginning to set a precedent.

Powell, Trump’s Favorite Target on a Crusade

When Donald Trump tweets, the tremors are seismic.:

This guy is a total and complete idiot.

That’s it. And it’s not an isolated slip.

The former president wants the Fed to cut rates by at least two points. According to him, this would. He accuses Powell of dragging down the economy for political reasons. Governor Waller, although appointed by Trump, remains stoic: “Our mandate is employment and price stability. Not refinancing the government debt.”

But Trump keeps waving the threat: “ Maybe I should change my mind and fire him“. In an election year, these attacks fit into. An independent Fed? On paper, yes. In reality, it’s more complicated.

Worth noting:. Futures rather indicate September. But the political pressure does not ease at all.

What if Trump forces the change with tweets more effective than a thousand FOMC meetings?

The American Economy Between Weak Signals and Alarm Signals

On the one hand, analysts like John Leer (Morning Consult) believe the. On the other, several indicators are flashing warnings.

• Unemployment among graduates reaches 7%, a 25-year high;
• The Challenger report announces a 47% increase in layoff plans in one year;
• The unemployment rate could rise to 4.8% by the end of 2025 according to Pantheon Macroeconomics;
• EY-Parthenon forecasts growth barely at 0.8% in the last quarter;
• Bitcoin trades at $102,466 per coin;
• 34% of small businesses cannot find candidates for their vacancies.

Even: the Philadelphia Fed index hit its lowest level since May 2020. Waller calls this “cracks in the employment wall“. For him, tariff effects will be moderate and mostly temporary. Better to act early than too late.

But not everyone shares his analysis. Michael Pearce (Oxford Economics) thinks the economy is not yet weakening enough to justify an immediate cut.

So, should the Fed anticipate or wait for the walls to crumble?

Economic signals diverge, interpretations collide, and political pressures reach new heights. One governor steps out of line, a president parodies the monetary civil war publicly. But DEEP down, one geopolitical factor weighs heavier than admitted: the tensions in the Middle East. The uncertainty related to these conflicts pushes the Fed to hold back. In this complex equation, a too-early move on rates could reignite inflation. The timing therefore remains suspended on far more than just a graph or a curve.

Maximize your Cointribune experience with our "Read to Earn" program! For every article you read, earn points and access exclusive rewards. Sign up now and start earning benefits.