Fed week

This week will be dominated by the Fed interest rate decision, which absent any surprises, should yield no change. As you can see in the chart below, the odds discount no change almost with certainty. The focus will be on the press conference, where J Powell will likely be asked about the possibility of a recession, and the answer will be analyzed to the dot. On the other side of the pond, the CPI for the EU will be published, with an expected annualized growth of 2.4%. This is important because the ECB is still dovish and looking to keep cutting rates, but they need support from data. It is also important because the German stimulus package gathered the necessary votes, and we know that will likely be inflationary. It looks like liquidity will be abundant in Europe, while the U.S. is trying to desperately cut spending while affecting growth the least possible and trying to obtain money from tariffs. The jury might still be out, but money is flowing to Europe.

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