The Working Person's View on Powell: Why is the Rate Cut Delayed, and How to Position?
As a working person, watching the Fed's interest rate decisions is exhausting and frustrating. Powell has stated that there is no rush to cut rates; he wants to wait for more data. Inflation has cooled, but not enough. A rate cut could happen twice in 2025, but Trump has jumped in to criticize Powell as 'foolish,' urging a 2% cut, which has created more chaos in the market. With my salary, I need to invest cautiously.
Will there be a rate cut this year? It feels uncertain. The inflation rate is 2.6%, close to the 2% target but unstable. Powell will likely drag this out for a few more months, and there might be a slight cut of 0.25% by the end of the year. The pressure from Trump could cause market expectations to fluctuate wildly, but the Fed doesn't like being pushed by politicians.
In terms of positioning, I’m not chasing high crypto stocks; although Circle is popular, the volatility is too high. I’ll save some salary to buy U.S. Treasury bond ETFs for more stable returns. In stocks, I’ll choose some consumer stocks, as the rate cut expectations could support their valuations. I’ll keep half of my cash as a cushion against unemployment or unexpected situations. Working people don’t have much money, so it's important to prioritize stability and make a small profit to cover living expenses, and we'll wait for the rate cut to talk more about it!
