The feds doesn't care about the markets. The feds two responsibilities are: maximize employment and control inflation/deflation. Feds will sacrifice everything to get to those goals. It's their mandate.
"so as to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates."
https://www.federalreserve.gov/mone...olicy-what-are-its-goals-how-does-it-work.htm
A couple years ago feds raised interest rates and it crashed the entire stock and bonds markets. At least 1 regional bank failed because of their actions.
Most agree Powell is a very bad fed chairman. There is a lot of pressure on Powell to cut interest hard and fast. Trump and his team made it public many times already for cutting interest rates.
Inflation fell .2% in the last report to 2.2%. That's extremely fast when most believed that inflation is going to raise due to tariffs. The target inflation is 2%.
If inflation goes below 2% then all the blame goes to Powell because Trump told him for months to cut interest rate. There is enormous pressure now on the feds to cut interest rates.
The FX market is betting the fed will cut interest rate very soon. Hence the rapid decline of the USD. The bonds market is betting the other side. Bonds market doesn't believe it will happen anytime soon. Both can't be right.
Here is the odds for a rate cut in June. 94% of no rate cut.
https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html
