The Macro Trading Floor Time For The Fed To Turn Dovish?
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Jun 13, 2025 Alf and Brent delve into the latest soft CPI report and its implications for the Federal Reserve's potential shift in strategy. They tackle the surprising stability in markets despite tariff concerns and examine inflation trends influenced by the labor market. Insights on currency dynamics, especially the euro versus the dollar, reveal interesting trading strategies. Additionally, the discussion covers challenges in current carry trades and highlights the rising interest in platinum and cryptocurrencies, showcasing evolving market psychology.
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Tariffs' Minimal Economic Impact
- The impact of tariffs and economic policy uncertainty on real economic data is surprisingly limited so far.
- Inflation is soft, and job growth remains steady despite these external pressures, frustrating bearish expectations.
Gradual Tariff Pass-Through
- Companies appear to be passing tariffs onto consumers gradually, limiting goods inflation.
- Goods constitute about 23% of core CPI, so this gradual pass-through keeps the overall inflation impact limited.
Services and Shelter Inflation Decline
- Services inflation has been declining steadily since 2021, offsetting any rise in goods inflation.
- Shelter inflation, a large portion of core inflation, has dropped to near pre-pandemic levels.
