FOMC Minutes, Tariff Mahem, and a Whole Lot of Price and Industrial Production Data Releases – Currency Thoughts
FOMC Minutes, Tariff Mahem, and a Whole Lot of Price and Industrial Production Data Releases
July 10, 2025
People are seeing what they want to see in yesterday afternoon’s publication by the Fed of minutes from the June 17-18 FOMC meeting. The minutes retain a majority view that embodies the likelihood of two 25-basis point rate cuts later this year. But support for a cut at this month’s policy review was pretty small, probably reflecting the views of Waller and Bowman but not much beyond them. A wait-and-see meeting-to-meeting approach seemed prudent in light of ongoing tariff uncertainty and U.S. labor market resilience.
The extent of President Trump’s frustration with Fed policy was indicated by his expressed opinion that the federal funds target ought to be three percentage points lower than where it is. That would put the target range at 1.25-1.50%, which by the way was last seen in June 2022 when U.S. consumer price inflation was peaking at 9.1%.
Twenty-one governments have now received tariff letters, including a 50% duty that would be imposed upon Brazil, which hosted the recent BRICS leaders summit. Lately, markets have been reacting less to the breadth and extreme elevation of the potential tariffs than to leaked comments expressing optimism in the progress of trade deal talks that might lead to smaller tariff penalties. The latest of these came from the European Union”s lead negotiator Maros Sepcovic.
Just In: Further evidence of the U.S. labor market’s resilience in the face of policy uncertainty was delivered by last week’s jobless insurance claims report. New claims undershot expectations at a 7-week low of 227k. The spike to 250k in the month-earlier week of June 7 is looking more and more like an aberration than a harbinger of more joblessness to come.
European stock markets are shrugging off tariff uncertainty better than their U.S. counterpart. While pre-open stock futures today are essentially unchanged, the British and French exchanges currently show gains of 1.1% and 0.4%. Likewise, equities closed up today by 0.7% in Taiwan, 0.6% in Australia, Hong Kong and South Korea, 0.9% in Indonesia, 0.5% in China, and 0.4% in Singapore.
The 10-year U.S. Treasury yield is a basis point firmer, contrasting with dips of two basis points in the 10-year British gilt yield and a basis point in comparable sovereign debt yields of Spain, Italy, and Japan. Aside from a jump of over 1% against the Turkish lira, the dollar is narrowly mixed.
Bitcoin touched a fresh all-time peak yesterday of $112,055 and is currently hovering about 1% below that level. West Texas Intermediate oil has settled back 1.1%, while gold is little changed.
The National Bank of Serbia kept its policy interest rate unchanged as expected at 3.75%. Ten months have passed since the last rate change in September 2024 when such was cut 25 basis points for the third time within three months. Decisions are being decided on a meeting-to-meeting basis, and there’s no sense of urgency especially since the ECB is thought likely to pause its rate-cutting cycle at the next review. Serbian consumer price inflation of 3.8% in May was at an 11-month low but above the target mid-point of 3.0%. “As the prices of petroleum products rose on the back of elevated global oil prices in June and the anticipated effects of adverse weather on food prices, y-o-y inflation will most likely post a temporary pick-up in the coming months, trending around the upper bound of the target tolerance band.”
Many countries reported price data today starting with Japan’s producer price figures. A 0.2% monthly dip in domestic corporate goods prices depressed their 12-month advance to a 10-month low of 2.9%, while import prices were sinking 1.7% on month and 12.3% on year. Investors also learned that
- Irish CPI inflation had edged 0.1 percentage point higher to a 2-month high of 1.8% in June.
- German consumer price inflation for June was left unchanged from the preliminary 2.0% estimate, representing an 8-month low. The drop occurred in spite of a smaller year-on-year decline in the energy component.
- Norwegian June CPI inflation matched May’s 3-month high of 3.0%.
- Danish CPI inflation accelerated to a 4-month high of 1.9% from 1.6% in May and 1.5% in both March and April.
- Portuguese CPI inflation of 2.4% in June was at a 4-month high and unrevised from an earlier estimate.
- Moldovian CPI inflation rose to a 3-month high of 8.2% and was nearly three times greater than the 2024 low-point of 3.3%.
- Czech CPI inflation increased half a percentage point to a 6-month high in June of 2.9%.
- Having previously imploded from 24.0% in October 2022 to as negative as 4.7% by September 2024, Croatian producer price inflation increased 0.2 percentage point to a 22-month high in may of 1.4%.
- Mexican consumer price inflation settled back marginally to a 2-month low of 4.32% last month.
- Even before the aforementioned 50% tariff to be imposed on Brazilian exports to the United States, Brazilian consumer price inflation exceeded 5.0% for a fifth straight month including 5.35% in June. The rate had previously slowed from 12.1% in April 2022 to 3.16% in June 2023.
Between May 2024 and May 2025, industrial production rose 36.8% in Ireland, 5.0% in Sweden and 4.9% in Turkey but fell by 6.6% in Bulgaria, 4.0% in Slovakia, 2.0% in Greece, 0.2% in Slovenia and 0.1% in Austria. A 2.0% May jump in factory output in South Africa — the largest monthly rise in over a year — swung the year-on-year comparison to a rise of 0.5% after six straight negative results including a drop of 6.4% in April.
Copyright 2025, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: June consumer prices, National Bank of Serbia, Trump complaint about Fed policy
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