Trump's meeting with Powell has eased relations; Fed officials continue to adopt a hawkish stance, with no hope for rate cuts before September! Tariff policy ordered by U.S. courts to be revoked within ten days; watch tonight's core PCE and see if the market can stop falling and rebound?

When will the Fed cut rates this year? This is not only a matter of global investor relations. The director of the U.S. Housing Finance Agency recently publicly called out Fed Chairman Powell on his Twitter, saying it’s really time to lower rates; enough is enough!

Because the U.S. real estate market is already in deep trouble, the fresh data just released in April shows that the U.S. secondary home market has experienced the worst April since the 2009 subprime mortgage crisis, with a year-on-year sales decline of more than 2%. This is due to excessively high mortgage rates; the 30-year mortgage rate has now reached 7%, almost unchanged from before the Fed's current rate cuts.

The Fed is currently in no rush to cut rates. At a financial forum held in Japan yesterday, two high-ranking officials, one being the number three person at the Fed, New York Fed's Williams, and the other being this year's voter Kashkari, both issued hawkish statements. They both believe that the U.S. is currently experiencing high tariffs, which brings a lot of uncertainty to future inflation.

They are also advising their counterparts at the Bank of Japan to boldly maintain high interest rates in the face of uncertain inflation paths. The implication is that Japan can confidently raise interest rates, and we at the Fed will also maintain high rates and will not cut rates for the time being.

The attitude of senior Fed officials is very clear: before the impact of tariffs on the economy is fully revealed, that is, before the July unemployment and inflation data comes out, the Fed will hold steady. Even if inflation rebounds, it may be very difficult for the Fed to cut rates this year.

In contrast, Wall Street appears much more optimistic than the strong stance of the Fed. Currently, the CME interest rate futures market shows that there are expectations for two rate cuts this year. The probability of a rate cut in July is just over 20%, while the probability for September is as high as 60%. This means there could be two rate cuts in September and December this year, and JPMorgan firmly stands with the Fed, believing that there will be no more rate cuts this year.

So how is the situation evolving? Tonight's core PCE inflation index is very important. Can the market stop falling and rebound? Will it return to an upward channel or enter a medium-term fluctuation adjustment? We will continue to observe and not rush to conclusions.

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