Apocalypse Postponed Until Fall

#SP500

Key zone: 6,350 - 6,430

Buy: 6,450 (after a correction to 6,350); target 6550-6600; StopLoss 6,380

Sell: 6,300 (on a strong negative foundation); target 6150-6100; StopLoss 6,370

Powell’s speech was tough: the labor market looks strong, inflation remains high, the effect of Trump’s tariffs may take years, and commodity inflation has started to show up in retail prices, so we will hold the rate until new data arrives.

This is exactly the tactic we expected from the Fed in response to Trump’s blackmail.

For the first time since 1993, two FOMC members voted against keeping rates unchanged: Lady Bowman and Mr. Waller proposed supporting the president and cutting the rate by 0.25%. Interesting—do either of them now have a shot at becoming the next Fed Chair?

The market reacted with instability and pessimism. Following the decision and press conference:

• UST 10Y yields rose by 0.03 pp

• S&P 500 fell by 0.5%

• Gold dropped 0.8%

• The dollar strengthened by 0.4%

The rate intrigue is now shifted at least until September—back in June, the Fed forecasted two cuts this year. Only 3 meetings remain (September, October, December), but there are no clear signals.

Powell, in a lecturing tone, stated that inflation is not rising because the Fed keeps rates at 4.5%; if the Fed cut them, inflation would jump immediately. A clear jab implying Donnie is an economic amateur.

Powell’s rhetoric made it clear that no inflation report would make the Fed lower the rate—only deterioration in the labor market would. The key labor metric: unemployment rate.

Jay reiterated that the Fed deliberately ignores government spending when making rate decisions to maintain credibility, but the committee is fully aware of all spending details.

The remark about poor quality in CPI reports shows the Fed is aware of attempts to tamper with official statistics and will introduce extra oversight.

Powell needs a disastrous NFP, but the reaction to any stats in the next two months will be sharp and volatile—a perfect setup for speculators.

We await the NFP, the positioning after its release, and only then will we risk adjusting price levels and positions.

So we act wisely and avoid unnecessary risks.

Profits to y’all!