FED Watch Q2 Update

FED Watch:

Previously we wrote that Trump demanded Jerome Powell and the FED lower interest rates. It looks like he wasn't bluffing with the recent tariff announcements seemingly purposefully tanking the economy to force the FED's hand. The unprecedented tariffs were substantially higher than expected resulting in a market meltdown with major indices down roughly 10% or more over the past couple days. The thought process is increasing costs will drive lower consumer spending leading many to fear a recession and layoffs.  

Inflation:

All eyes are on inflation with the FED signaling that the tariffs might increase inflation as higher costs are passed on to consumers. Tariff increases are mostly born by the importer which will fall on US companies in most cases and must ultimately be passed along to the consumer by way of increased prices. Some experts are predicting Core CPI at 4% to end the year...

Labor Market:

The US economy added 228,000 jobs in March, well ahead of the 140,000 expected or the 151,000 in February. The unemployment rate rose slightly, from 4.1% to 4.2%. The employment report was pretty uneventful, but many took it as irrelevant with the majority of the focus on the impacts of the tariff announcements. Even though some were concerned of the impact of government and private sector layoffs, the new focus is on how tariffs will impact consumer spending, jobs and inflation.

10 Year Treasury Impact:

In a bright spot for Commercial Real Estate, the 10 Year treasury dipped below 4% throughout Friday eventually settling at 4.00% flat. It appears Trump got his wish forcing interest rates lower through an induced mass panic buying of treasuries, but the question remains... At what cost?