Our nation’s trade policy has soared to one of the top issues during President Trump’s first term. Tariffs are deeply dug in, an ironclad promise to a muscularly protective economic nationalism. Odious legal challenges to the tariffs imposed under the International Emergency Economic Powers Act (IEEPA) of 1977 continue. Specialists subsequently forecast that efficient tariff rates will stay high through 2025. Experts say the trade deals signed so far are seen as “largely symbolic.”
Last week’s economic releases showed an increasingly solid consumer spending picture as we rolled into the second quarter with good quarter to date. Employment numbers, too, paint a picture of a robust labor market, with continued growth reported in May. Unemployment is still stable since March. That’s a little under the Federal Open Market Committee’s (FOMC) own estimate of full employment.
Though downward revisions may seem to be the only thing going for economic growth estimates, the recently released data gives a somewhat mixed picture going forward. Look for a 0.2 percent upward revision to GDP growth forecast, taking it up to a hair over 1%. This follows a widespread contraction in the first quarter and continued major headwinds forecasted for the second half of the year.
Wells Fargo analysts predict no change in the FOMC’s monetary policy stance. Indeed, they fully anticipate that the committee will hold its target range for the federal funds rate steady at 4.25%-4.50% at their next meeting June 17-18. Monetary policy’s near-term outlook is steady-as-she-goes. They policymakers described the near-term outlook for monetary policy as…steady-as-she-goes.
With positive momentum across markets, gold prices push their rebound week after week. Prices are hovering around $3,400 per troy ounce. Cardano (ADA) seems to be exhibiting continued weakness. It has bounced back from an overhead trendline of a possible triangle pattern and has dipped back under 1% as of Thursday. Retreat on the Up Hill. This movement downward is a big part of an overall steeper correction in its Open Interest.
Currency pairs are experiencing significant movements. The EUR/USD cross has moved further up its recent trend, trading at nearly 1.1700 highs from November 2021, above the psychologically important 1.1600 level. At the same time, GBP/USD has a constructive tone above 1.3600.
When it comes to our tariffs, the conversation is getting downright contentious. It’s no secret that the US administration is going all-out to protect their economy. This commitment seems to be positively mirrored in a number of economic indicators, from consumer confidence to employment statistics.
“We expect the FOMC will leave its target range for the fed funds rate unchanged at 4.25%-4.50% at the conclusion of its upcoming meeting on June 17-18.” – Wells Fargo
With continued uncertainty about global economic conditions, the US economy is showing resilience, as seen in stable employment statistics and continued consumer spending. The decision to uphold such high tariff rates is an indication that policymakers are willing to choose domestic economic stability over wins in international trade negotiations.