MARKET UPDATE

This morning equity markets are up and Treasury yields held steady with the 10-year yield trading near 4.10%.  The latest CPI data came in at 2.7%, still stubbornly above the Fed's 2% target.  On the other hand, recent jobs and unemployment data was revised significantly lower, a potential sign of stress.  Looking ahead, expectations are for at least one more rate cut in 2025, with the first 25bps cut announced at the conclusion of this week's FOMC meeting.  The June 2025 forecast materials suggest that the target rate will move modestly lower in the remainder of 2025.  The Fed continues to observe the economic data and act to maintain their dual mandate of 2% inflation and full employment.  Up to this point, the Fed preferred to be patient before lowering rates further, as they observe how recent policy changes impact inflation and employment, in particular the impact and scale of the Trump administration's tariffs.  At the beginning of August the administration set a global minimum tariff of 10% and delayed the China tariffs for a new 90 day period. 

- CMS Staff