Mounting pressure

The stars are aligning for Trump when it comes to the future of oficial interest rates. first the unemployment report on Wednesday where the overall number was not bad, but showed enough weakness, particularly after the adjustments, to reaffirm the narrative of soft employment, and yesterday the inflation report showed CPI slightly better than expected, but just enough to set the stage for the Fed to conclude that tas should be lower. Are the number being “tortured” to confess a convenient truth? Likely. Partial government shutdown, staff that is shorthanded, adjustments done at a specific point in time, indicate that we are being framed into believe that even though the economy is great, we need another push from monetary policy. And all this is happening as we patiently wait for the Supreme Court to rule on tariffs. But the next FOMC is scheduled for March 17-18th, and as of today, the odds for a cut are very low (8.4%), even after these data points. We should expect mounting pressure on the Fed over the next 4-5 weeks to push them into the “right” mindset.

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