MARKET UPDATE

This morning equity markets are mixed and Treasury yields fell with the 10-year yield trading near 4.40%.  The latest CPI data continues to remain stubbornly above the Fed's 2% target.  On the other hand, recent jobs and unemployment data has started to weaken in recent months.  All three of the fall 2025 FOMC meetings resulted in 25bps cuts, but the Fed held rates steady again at the June meeting, with no change so far in 2026.  The new forecast materials suggest that the target rate will likely continue to move modestly lower over the year.  The Fed continues to observe the economic data and emphasize that their focus is on maintaining the dual mandate of 2% inflation and full employment.  The FOMC prefers to be patient before lowering rates, as they observe the available data on those two key metrics in today's dynamic economic environment.  The June meeting was the first one with Kevin Warsh as Chair, after his recent confirmation vote in the Senate.  Notable topics at this point in the current economic cycle are the economic impacts from the conflict with Iran, as well as recent global trade policy changes.  The FOMC will continue to observe and discuss how these events and the current rate level impact inflation and employment in the US.  

- CMS Staff