Fed’s Bowman Boosts July Rate Cut Expectations, S&P 500 Rises

Federal Reserve Governor Michelle Bowman's endorsement of a potential July rate cut has sent market probabilities soaring. Odds for a 25-basis-point reduction now stand at 24.8%, up sharply from 14.5% just yesterday. The policy pivot comes as inflation shows sustained moderation, with May's CPI reading at 2.4% year-over-year - edging closer to the Fed's target.

Bowman's remarks follow similar dovish signals from Governor Christopher Waller, who last week argued against waiting for labor market deterioration before easing policy. The S&P 500 has climbed on the prospect of cheaper borrowing costs stimulating economic activity.

Notably absent from recent inflation data is any significant impact from trade tariffs, removing what some analysts feared could become a persistent price pressure. The Fed appears increasingly focused on preemptive action to sustain employment growth as price stability goals come within reach.