Dow surges on ease of Trump’s Fed, Trade, and Iran war tensions

·       A preliminary US trade deal with China and India is ready for an imminent official announcement; Trump may also extend the tariff pause to December 2025

·       After the chatter of an early Fed Chair pick by Trump, which caused panic selling in the USD, Trump sounded less hawkish on Powell; USD recovered, and Gold slid

·       The deluge of Fed talks in the last few days indicates a coordinated effort by the Fed to prepare the market for the rate cut from September, not July

On June 24, Trump posted on Truth Social, calling Powell “very dumb, hardheaded” and urging Congress to pressure him. Trump has advocated for a dramatic rate cut to 1% or 2%, a move Powell and most other FOMC members deem inappropriate given current economic conditions. ‘Expert economist’ Trump also ‘advised’ Fed Chair Powell to hike rates later if inflation popped up. Trump even urged the Federal Reserve Board and US Congress to ‘force’ Powell to make an immediate rate cut.

Trump’s recent deluge of truths against Fed Chair Powell:

June 24, 2025:

·       “Too Late” Jerome Powell, of the Fed, will be in Congress today to explain, among other things, why he is refusing to lower the Rate. Europe has had 10 cuts, we have had ZERO. No inflation, great economy - We should be at least two to three points lower. Would save the USA 800 Billion Dollars Per Year, plus. What a difference this would make. If things later change to the negative, increase the Rate. I hope Congress works with this very dumb, hardheaded person, over. We will be paying for his incompetence for many years to come. THE BOARD SHOULD ACTIVATE. MAKE AMERICA GREAT AGAIN!

June 21, 2025: Trump insulted Powell and again threatened to fire him for not cutting rates

·       “Too Late” Powell complains about costs, much of which were produced by the Biden Fake “Government,” but he could do the biggest and best job for our Country by helping to lower Interest Rates and, if he reduced them to the number they should be, 1% to 2%, that “numbskull” would be saving the United States of America up to 1 Trillion Dollars per year.

·       I fully understand that my strong criticism of him makes it more difficult for him to do what he should be doing; lowering Rates, but I’ve tried it all different ways. I’ve been nice, I’ve been neutral, and I’ve been nasty; and nice and neutral didn’t work! He’s a dumb guy, and an obvious Trump Hater, who should have never been there. I listened to someone that I shouldn’t have listened to, and Biden shouldn’t have reappointed him.

·       We have virtually No Inflation, our Economy is doing well, and will soon be doing even better, with the tremendous Tariff Income coming in, and Factories being built all over the Country, better than it has ever done before. If he was concerned about Inflation or anything else, then all he has to do is bring the Rate down, so we can benefit from Interest Costs, and raise it in the future when and if these “other elements” happen (which I doubt they will!). 

·       Don’t say that you think there will be Inflation sometime in the future, because there isn’t now, but if there is, raise the Rates! We should be at the TOP of the attached List, not the bottom. I don’t know why the Board doesn’t override this Total and Complete Moron! Maybe, just maybe, I’ll have to change my mind about firing him? But regardless, his Term ends shortly!

In his June 24-25 Testimony, Fed Chair Powell sounded less hawkish compared to June 18 Fed policy meet; but Powell also mot in favor of the start of another rate cut cycle from July; he is preferring to wait till at least July-August to get certainty of Trump’s tariff trajectory before deciding for any rate cut from September’25.

On Wednesday, June 25, 2025, Federal Reserve Chair Jerome Powell testified before Congress during his semi-annual monetary policy hearing, stating that future trade deals could potentially reduce economic uncertainty and create conditions for the Federal Reserve to consider cutting interest rates. When asked specifically if potential trade agreements between the U.S. and other countries could ease uncertainty enough to prompt rate cuts, Powell responded, "Yes, potentially it would." He further elaborated that "reducing uncertainty would help, and getting settled on what is going to be the final tariff rating," indicating that clarity on trade policies, particularly tariff structures, could stabilize economic conditions and influence monetary policy decisions.

This, along with recent dovish comments by Fed’s Governor Waller and Bowman (both Trump-appointed) and other Fed policymakers' less dovish comments, indicates Fed is now debating the timing of rate cuts, not about whether Fed will cut or not cut. Usually, the Fed never makes any rate decision without keeping the market prepared well in advance. Thus Fed is now preparing the market for the start of a potential rate cut cycle from September 2025, if Trump’s tariff plan gets certainty by August.

But Trump is losing patience very fast with Fed’s Chair Powell, as Trump also knows inflation is bound to be hotter in the coming months (H2CY25) as the front-loading of import/stocking effect in anticipation of higher Trump tariffs may be over by June’25. Even a 15.5% weighted average Trump tariffs (10% basic higher Chinese and various sectoral tariffs), effective from Q2CY25, may boost US inflation from Q3CY25 onwards. The

The Trump admin also knows this fact and thus is now pressuring the Fed to go for a crisis-era rate cut of 100-200 bps at a time or within a short span. By pressuring the Fed, US President Trump is complicating the Fed’s job more and also hurting the future credibility of the Fed as an independent institution. This may hurt the USD's credibility as a global reserve currency in the future, and the US may be losing the advantage of its greatest weapon, the USD hegemony, which it uses for geopolitical influence and becoming the number one superpower in the world.

According to a June 25, 2025, WSJ report, President Trump is considering announcing a successor to Federal Reserve Chair Powell as early as September or October 2025, potentially even in the summer, to undermine Powell’s authority before his term ends in May 2026. This move stems from Trump’s frustration with the Federal Reserve’s slow pace in cutting interest rates, which he believes is hindering economic growth amid his tariff policies. Higher borrowing costs are also causing the US Treasury to pay additional interest on public debts, and a rating downgrade by Moody’s recently.

The WSJ report highlights three key contenders for the role: former Fed Governor Kevin Warsh, present White House National Economic Council Director Kevin Hassett, and Treasury Secretary Scott Bessent. Trump is evaluating these candidates based on their commitment to lowering interest rates and their "television appeal," reflecting his emphasis on public image (like a live soap opera). The concept of a "shadow Fed Chair" refers to Trump potentially naming a successor early to influence monetary policy expectations before Powell’s term ends in May 2026.

The WSJ report about Trump’s thinking for the next Fed Chair:

·       Trump considered revealing Powell's successor by September or October

·       Warsh, Hassett, and Bessent considered as Trump evaluates dedication to cutting rates and appeals for television

Kevin Warsh: A former Fed Governor (2006–2011) and economic adviser to President George W. Bush, Warsh is seen as a leading contender due to his Republican ties and Wall Street experience. He has criticized the Fed’s handling of inflation and its political involvement, aligning with Trump’s views. However, his hawkish stance on monetary policy and past support for globalization may clash with Trump’s preference for aggressive rate cuts and protectionist policies. Warsh has advised Trump against firing Powell early, citing legal and market risks.

Kevin Hassett: As director of the National Economic Council, Hassett is a close Trump adviser and a potential candidate. His loyalty to Trump and alignment with the administration’s economic agenda make him appealing, though he lacks the extensive central banking experience of Warsh or Bessent.

Scott Bessent: Currently Treasury Secretary, Bessent is a strong contender due to his success in managing Trump’s tariff-driven economic policies and his Wall Street background, including managing investments for George Soros. While Bessent has expressed a desire to remain Treasury Secretary through 2029, he has not ruled out the Fed role, with allies pitching him as a candidate. His market credibility and rapport with Trump bolster his case, though his appointment would require Trump to find a new Treasury Secretary.

Present Federal Reserve Governor, a known dove and Trump loyalist, Waller, the next Fed Chair?

Waller, appointed by Trump to the Federal Reserve Board of Governors in 2020, has a term extending to January 2030. He previously served as executive vice president and research director at the Federal Reserve Bank of St. Louis and held academic positions at Notre Dame and the University of Kentucky. His research focuses on monetary theory, political economy, and macroeconomic theory. Waller has recently advocated for interest rate cuts as early as July 2025, citing a softening labor market and the temporary nature of tariff-driven inflation. This aligns with Trump’s push for lower rates, positioning Waller as a potential ally.

Fed Governor Waller is the second-most dovish Fed official since 2024, behind Chicago Fed President Goolsbee, suggesting he could prioritize rate cuts over tariff-related inflation concerns. Naming Waller as a shadow chair could signal Trump’s intent to steer the Fed toward looser monetary policy. However, his support for a 50-basis-point rate cut in September 2024, ahead of the presidential election, could complicate his standing with Trump. Waller’s existing FOMC voting power and relationships within the Fed could ease policy shifts. However, external candidates like Warsh, who has criticized the Fed’s quantitative easing, or Bessent, with his market credibility, might face resistance due to their outsider status or past critiques of Fed independence.

Announcing Waller as a shadow chair could influence market expectations, potentially pricing in earlier rate cuts. However, this risks bond market volatility if investors perceive the nominee as overly aligned with Trump’s agenda, undermining Fed independence. Naming Waller as a credible candidate in advance due to his Fed experience and dovish shift, but as a shadow chair, could erode the Fed’s independence and destabilize markets.  Powell’s legal protections against early removal and the risks of politicizing monetary policy may be a huge negative for USD credibility.

The strategy of naming a successor early aligns with Bessent’s earlier suggestion of creating a “shadow Fed Chair” to influence market expectations and diminish Powell’s influence. This approach risks market volatility, as investors may react negatively to a perceived Trump loyalist, potentially unsettling bond markets and inflation expectations. Legal constraints also complicate any attempt to remove Powell before his term ends, as the Federal Reserve Act allows dismissal only “for cause” (e.g., misconduct), a protection reinforced by a 1935 Supreme Court ruling.

Overall, Trump is trying to politicize the Fed; an early announcement could destabilize markets and challenge the Fed’s independence. Trump’s criteria (rate-cutting dedication and TV appeal) as unconventional and potentially disruptive; Trump’s focus on “television appeal” suggests a prioritization of political optics over policy expertise, which could undermine the Fed’s credibility if the nominee is seen as a loyalist. The early announcement may be a strategic power play to pressure Powell without risking a legally contentious firing, but it could backfire by creating uncertainty in financial markets. The lack of formal interviews or a confirmed nominee as of June 2025 indicates this remains a speculative move driven by Trump’s rhetoric.

Highlights of comments by Fed’s Waller on June 20, 2025:

·       I do not think the inflation impact from tariffs will be big; the trend is looking good

·       Central banks should look through tariff effects on inflation

·       The Fed is in a position as early as July for cuts

·       I am not sure if the committee would go along, but the data is good, unemployment is low, and inflation is close to target

·       The Fed has room to bring rates down, and then can see what happens with inflation

·       The process should start slowly to be sure there are no surprises. If there is a shock, the Fed could pause

·       The tariffs should pose a one-off level effect on prices and not be a persistent boost to inflation

·       Inflation persistence from tariffs is a valid concern

·       The job market is solid, but starting to see things like high unemployment for recent graduates

·       The labor market is ok, but not as strong as in 2022

·       Seeing job creation coming down, and other things that are suggesting the labor market is getting weaker

·       I don't want to wait for the job market to tank before cutting rates

·       Tariffs will not be completely passed through; a 10% tariff on all imports would not have much impact on overall inflation

·       The Fed has a mandate to worry about unemployment and inflation, not to provide cheap financing for the Federal government

·       Workers are not in a position to demand higher wages in response to tariffs, a reason not to worry about the second-round effects

Highlights of comments by Fed’s Barkin on June 20-26, 2025:

·       I am not ready to dismiss inflation risk from tariffs

·       We can't ignore a spike in inflation if it comes, price indexes are still above the target

·       There is nothing urgent in the data warranting a rate cut at this point

·       The job market and consumption are holding up

·       Firms say they expect to raise prices later in the year as more expensive imported goods work into their inventories.

·       Firms not impacted by tariffs see confusion over trade policy as a moment to raise prices for other reasons.

·       There is no conviction on where trade policy will settle, or on how it will impact prices, jobs.

·       Businesses are still in a wait-and-see mode on capital spending and hiring plans.

·       Amid uncertainty, the Fed has time to take in data

·       Fed policy is well-positioned for where the economy might go

·       Inflation will be pressured higher by tariffs

·       I don't expect a replay of pandemic-era inflation

·       Expects tariff policy to continue to change

·       The outlook for the economy remains cloudy

·       Recent economic data has been solid

·       The Fed faces risks on both job and inflation mandates

·       Recent inflation data is encouraging, job market is healthy

·       Businesses are still in pause mode amid uncertainty

·       Immigration drop eases pressure on unemployment

·       There is still a lot of uncertainty about how tariffs will settle out

·       It's hard for businesses to know where tariffs stand

·       It will likely take an extended period to settle the trade policy

·       I don't think tariffs will be as inflationary as some fear

·       Inflation expectations matter a great deal

·       I am not surprised to see near-term inflation expectations rise

·       Tariffs won't translate evenly into the economy

·       Recent inflation experience makes it harder to know what tariffs will do to the price.

·       The Fed will act on policy based on how data comes in

·       The exact timing of a fed move doesn't matter that much

·       Job market break-even is now back to around 80k-100k per month

·       Hiring and firing rates are quite low right now

·       There are still pockets of shortages in the job market

·       A possible neutral rate estimate will creep up over time

·       Policy may not be that restrictive. Consumption is steady

·       I question how successful businesses will be in trying to pass through tariff increases

·       I worry about taking too much signal from the University of Michigan sentiment data

·       Hiking rates does not seem like the topic of the day amid the cooling inflation trend

·       I won't take any action off the table, but I do seek more data

Fed’s Daly: June 21-23-26, 2025

·       Things are balanced

·       So far, the economy is in a good place, as is policy

·       Concerns about the tariffs' impact on inflation aren't as large as they were when they were first announced

·       It's great news that inflation has continued to come down

·       Without tariffs, I would be considering rate normalization

·       We have to continue to watch policies going forward

·       There are many possibilities on how much of the tariffs pass through to consumers

·       It is possible we could get a meaningful impact on inflation

·       It is also possible that tariffs won't have as much impact on inflation

·       We can't wait so long before fundamentals necessitate cuts

·       CEOs have cautious optimism on tariffs

·       I look more to the fall, rather than July, for a possible rate cut

·       Unless I saw a faltering labor market, the fall looks more appropriate for a rate cut

·       Additional softening in the labor market could easily turn into weakening. We can't let that happen

·       The policy is in a good place now

·       Risks to Federal Reserve goals are roughly balanced, and need to be on both.

·       Inflation, employment dangers are approximately equal

·       Further labor market slowing could turn into weakening

·       New data confirms the US labor market is solid

·       The Fed is still waiting for more information on inflation.

·       The fall looks promising for a rate cut

·       Believe tariffs will have a temporary effect on inflation

Fed’s Bowman: June 23, 2025

·       Data is not showing much impact from trade policy shifts

·       Government policy changes should lower inflation risks

·       Tariffs are likely to have a small impact on inflation

·       Progress on trade has lowered uncertainty over the outlook

·       Current Middle East strife could push up commodity prices

·       The labor market is solid, but there are signs of softness appearing

·       Would support a cut in July if inflation remains subdued

Fed’s Goolsbee: June 24-26, 2025

·       It's critical to look at soft economic data at the current moment of transition.

·       Tariffs are not unlike oil shocks with stagflationary implications

·       The current form of uncertainty is disconcerting for the economy

·       Thus far impact of tariffs has not been as bad as feared

·       Tariff impact blunted by lowered levels and exemptions

·       Less immediate pass-through of tariffs relative to the past

·       It's unclear right now how tariffs will drive inflation

·       The surprise so far is that inflation has jumped, yet on tariffs

·       There hasn't been much inflation in the last three months

·       If the tariff dirt in the air clears, we should proceed with a cut

·       I'm very worried about the stagflation outlook without knowing if it will happen

·       I don't see stagflation like in the 1970s

·       There is no clear policy response to a stagflation environment

·       I see a risk that both of the Fed mandates worsen at the same time

·       Government data could get noisier on budget cutbacks

·       The AI boom might pose a risk to growth in the short run

·       I'm neutral on crypto and mostly focused on financial stability

·       If we get through this period, the outlook is pretty strong

·       The job market remains steady and around full employment

·       Unemployment claims and other indicators support the view of a stable job market

·       Before the April 2 tariffs, it seemed the Fed was on solid ground on both of its mandates

·       The Fed needs clarity that there will not be an increase in inflation, and if one does come, that it will be transitory

·       Hope is that there will not be much inflation from tariffs, but there needs to be a few months of clarity

·       I am optimistic about recent inflation readings, but the Fed needs to be sure, particularly given coming deadlines like July 9 on tariffs

·       Tariffs may have only a modest impact on inflation

·       If inflation stays in the range of 2% and the uncertainty is resolved, the Fed is on a path to lowering rates

·       An early announcement by Trump of Powell's replacement would have no impact on the Federal Open Market Committee

·       The SEP long-term rate of 3% is reasonable

Fed’s Bostic: June 24, 2025

·       Business officials have become less pessimistic, feel they can manage through tariffs, but say price increases are just a matter of time.

·       The labor market remains solid, and consumption still resilient

·       Inflation risks remain as businesses run out of ways to postpone tariff-driven price hikes

·       I see economic growth slowing to 1.1% this year, and inflation rising to 2.9%

Fed's Hammack: June 24, 2025

·       There is still some distance to go for sustained 2% inflation

·       The economy’s resilience means the risks of holding are low

·       I feel like Fed policy is already close to neutral

·       It may well be the case that the Fed stays on hold for quite some time

·       The Fed has time to make the next decision on monetary policy

·       Tariffs may have a one-time hit on inflation, but that's hard to say right now

·       I supported the Fed's decision to hold rates steady at the June FOMC

·       Fed policy is modestly restrictive

·       I would rather be slow and right than fast and wrong with monetary policy

·       Sees the need for more watching before rate cuts

·       Progress on inflation has been very slow

·       A shift in immigration could affect how we interpret job data

·       The labor market seems stable

·       Immigration restrictions could be a barrier to growth in the medium term

·       We are not seeing a move to abandon the dollar by investors, but a move to a more neutral weight

·       There is no need to be overly dramatic about the shift out of the dollar

·       I am towards the top end of the Fed dot plot

·       The housing market is the one sector where I hear of labor shortages due to migration policy and other factors

Fed's Williams:

·       It's appropriate to maintain the current policy stance

·       The economy remains in a good place

·       Firms are passing tariff costs to customers

·       I expect real GDP growth to slow to about 1% this year

·       Uncertainty around inflation and immigration is elevated

·       The US economy is in a good place, job market is still solid

·       Uncertainty, tariffs, and reduced immigration will slow the economy

·       Expects unemployment rate to rise to around 4.5% by year’s end

·       Tariffs will boost inflation to 3% this year

·       Expects inflation to gradually decline to 2% over the next two years

·       Flags weak soft data versus more resilient hard data

·       Tariffs may be adding a quarter of a percentage point to inflation right now

·       I'm seeing more hedging of the dollar amid the rise of uncertainty

·       The tariff impact is likely to grow stronger in the coming months, and it will take time for tariffs to fully play out in inflation data.

Fed’s Kashkari: June 25, 2025

·       I'm hearing from businesses, strong fundamentals, and nervousness about tariffs.

·       Tariffs have introduced a complexity

·       We're still above 2% inflation target, but have made a lot of progress

·       The Fed is in a wait-and-see mode to get more clarity on the tariff's effect on inflation

·       I want to get a better sense of what's going on before we make a policy change

·       Tariffs still a question mark for policy

·       I don't know if dollar exceptionalism will change, and I don't know when a lot of debt becomes too much.

·       It's possible that the Fed could cut rates when inflation is still high if the labor market deteriorates sharply.

·       Independent monetary policy generally leads to lower inflation and, improved job market.

·       We base decisions on data and analysis, not politics

·       Inflation above 2% must return to 2%

·       Labor market still strong, not declining significantly

·       Aiming to maintain a robust job market

·       Need to proceed cautiously until understanding tariff-related inflation

·       The labor market is positive but slowing

·       Improve the evaluation of the tariff's impact on the economy

·       Companies are still reducing inventory before tariffs

·       Tariff-driven inflation effects, delayed, will occur

·       Do not bet against the dollar as the primary currency

·       Shocked that the Israel-Iran conflict did not spike oil prices

Fed’s Collins: June 25

·       The current state of monetary policy is necessary

·       Monetary policy is well-positioned. It's time for patience and care

·       I supported the Fed's decision to hold steady on rates last week

·       Tariffs are likely to push up inflation and lower growth, and hiring

·       I expect to see more tariff impact over the coming months

·       I expect it to be appropriate to lower rates later this year, but much depends on tariffs

·       The economy remains solid overall, and unemployment is low

·       There are some early signs of tariff-induced price increases

·       I see core PCE inflation above 3% by year-end due to tariffs

·       Most price changes are likely to happen over a few quarters

·       I expect to resume policy normalization later this year

·       July is probably too early for a rate cut

·       The baseline outlook is to resume cutting later this year

·       The Fed has time to carefully evaluate incoming information

Fed's Barr: June 25-26

·       Monetary policy is well-positioned for the Fed to wait and see how economic conditions unfold.

·       The US economy is on sound footing, unemployment is low and steady, and disinflation has continued.

·       Inflation is set to rise due to tariffs.

·       We may see some inflation persistence from higher short-term inflation expectations, supply chain adjustments, and second-round effects.

·       Tariffs may cause the economy to slow and the unemployment rate to rise

·       Real-world rates are significantly affected by other forces, but Fed policy does play a role

·       Monetary policy well well-positioned to wait and see how economic conditions unfold

·       It's important to bring inflation back to target, as low-income households can ill-afford price increases

·       Tariffs to put upward pressure on inflation, be some persistence

·       Tariffs may, at the same time, slow the economy and cause unemployment to rise

·       Low-income workers are often hardest hit when the job market weakens

·       Still considerable uncertainty on tariff policies and effects

·       Climate Change Likely Risk for Financial System

·       Fed Does Not Make Climate Policy, but Fed Needs to Pay Attention to How Banks Manage Climate Risk

Fed’s Schmid: June 25

·       Federal Reserve's two mandates likely to clash

·       The labor market appears to be in a good place

·       Watching data for indications of widespread price hikes

·       Suggests replacing core inflation with a measure that includes food

·       A resilient economy gives us time to observe prices

·       Economic Strength Allows Fed Time to Wait and See Before Rate Cuts

·       Jobs Inflation Near Federal Reserve's Goals

·       Contacts Predict Tariffs Will Raise Prices and Weigh on Activity

·       The Central Bank has time to study tariff effects on inflation before the rate decision

·       Policies should be set based on where the economy is headed

Now, from Trump’s Fed war to Trade & tariff war, on June 26, 2025, White House Press Secretary Karoline Leavitt made comments regarding trade deals during a press briefing. She addressed President Trump’s looming deadlines for re-imposing steep tariffs on imports from most countries, specifically mentioning the July 8 and 9 deadlines for restarting tariffs.

Leavitt stated that these deadlines are “not critical” and suggested that they “could be extended,” but emphasized that the decision lies with President Trump. She further noted that if countries refuse to make trade deals by these deadlines, “The president can simply provide these countries with a deal,” meaning Trump could impose reciprocal tariff rates he deems advantageous for the U.S. and American workers.

In a White House speech on June 26, 2025, President Donald Trump announced that the United States had signed a trade deal with China on June 25. He mentioned U.S. Trade Representative Jamison Greer, noting that Greer was "very busy" and that "everybody wants to make a deal and be a part of it." Trump provided no specific details about the China deal but hinted at a potential trade agreement with India, stating, "We are preparing a similar one with India — a very large one. We are going to open the Indian market for our products."

Trump also emphasized a selective approach to trade deals, saying, "We're not going to make deals with everybody. Some we're just going to send them a letter and say thank you very much, you're going to pay 25%, 35%, 45% tariffs." These comments were made during an event promoting a government spending bill (BBB) on June 26.

Trump on Fed rate & Chair, trade deal, and miscellaneous: June 25-26

·       We should be at least two to three points lower

·       A rate cut would save us $800b per year, plus

·       Modestly restrictive monetary policy gives space to examine new data

·       On Fed pick: I know 3 or 4 people I'll pick

·       USTR Greer is busy. Everybody wants to make a deal

·       Signed trade deal with China yesterday

·       Starting to open up China

·       China can now buy oil & gas from Iran; they will also buy from us

·       We have one coming up with India

·       'Big Beautiful Bill' is the ultimate codification of the agenda

·       We just signed a deal with China on Wednesday

·       Trump has not clarified what sort of deal with China was signed

·       It would be helpful if the Fed lowered interest rates

·       Trump on Fed's Powell: We have to fight this guy

·       We'll probably just extend short-term debt

·       Texas Instruments is going to spend $60 billion in the US

·       Ford and others with plants in the US will make a lot of money

·       We're taxing China, Mexico, and others, allowing fentanyl in

·       We hope Congress can pass the bill by July 4

On late June 26, soon after Trump concluded his White House event & speech, the US Commerce Secretary Howard Lutnick made some comments on potential trade deals. In a BBG interview, he clarified President Trump's June 26 White House remarks, stating that a trade deal with China was signed on June 25, codifying terms from earlier Geneva talks. This deal includes China delivering rare earths, with the U.S. reducing countermeasures in response. Lutnick also mentioned that the Trump administration aims to finalize trade deals with ten major trading partners by July 9, with negotiations for a U.S.-India trade deal nearing completion, described as at the “close finish line.”

The Commerce Secretary Lutnick: June 26

·       Tax Bill Passage Expected in Next Week or Two

·       A confident consensus will be reached on the salt tax deduction

·       The tariff program will not need to adjust if legislation changes

·       President Trump to announce numerous agreements in the next week or so

·       Plans to announce several deals in the upcoming week

·       Tax bill passage expected in the next week or two

·       Confident Consensus Will Be Reached on Salt

·       The tariff program will not need to change if the bill adjustments

·       The China deal was signed and sealed 2 days ago

·       Close Finish Line with India

·       Lutnick discusses the potential India agreement

·       July 9 will be the deadline for agreements on reciprocal tariffs

·       Countries seeking additional negotiations are welcome

·       Europe does excellent work after a sluggish beginning

·       I've become optimistic about the EU deal

·       The European deal will be at the end

·       The European deal will be final

·       July 9 will be the deadline for agreements on reciprocal tariffs

·       Countries desiring to negotiate more are invited

·       Plan to categorize countries by appropriate tariffs on July 9

·       The key move will come after significant legislation

·       The China deal, signed 2 days ago, includes the rare earths part

·       US to lift restrictions on ethane exports to China

·       Ethane action to follow China's rare earths delivery

·       The US to increase China trade restrictions once rare earth materials (REMs) are sent year on year (if China restricts REMs)

The US Treasury Secretary Bessent: June 25

·       On the Debt Limit: We will have something in the next 48 hours

·       President Trump is doing tax deals and trade deals

·       We are on track for a vote, hopefully on Friday

·       We can finish with trade deals after the July 4th tax bill passes

·       We're never going to default on national debt, but we're getting close to the warning track

·       US extends debt-limit measures through 24th July with Bessent

·       I asked Congress to remove Section 899 from the Tax bill

·       After dialogue with other nations on the OECD global tax deal, we will announce a joint understanding among G7 countries that defends American interests

·       OECD Pillar 2 taxes will not apply to US businesses

The WH Sr. Adviser Hassett: June 25-26

·       Trade deals will come sooner rather than later

·       There'll be a lot of trade deals after the tax bill passes

·       We hope not to have to include section 899 in the bill

·       There is plenty of room for the Fed to lower interest rates right now

·       High confidence tax bill will pass by July 4

·       Couple Recissions Packages Ready to Go (on BBB/Tax bill)

·       Packages Ready to Go

·       Many trade deals are pending

·       Close to a Deal With India

·       Trump is frustrated with the Federal Reserve

·       By May 2026, a new person at the Federal Reserve

·       Anticipates Change of Leadership at Federal Reserve

·       Hassett does not comment on the Federal Reserve Chair contender

China Commerce Ministry comments on China-US London Talks: June 27

·       Two sides further confirmed details on the framework

·       China will approve export applications for controlled items following the law

·       US to cancel restrictive measures against China

·       Both sides maintained close communication after meetings in London

Conclusions:

Most of the Fed policymakers, including known dove Goolsbee, are in favor of wait & watch for Trump’s final tariff policies and not in favor of rate cuts from July; but the Fed is now clearly preparing the market in a planned (synchronized) jawboning strategy for the eventual rate cut from September’25. Even Waller believes that the Fed should actively (officially) discuss (think) about rate cuts from July, even if the Fed holds in July.

The onus is now on Trump for clarity about his tariff policies. As of now, it seems that Trump admin will finalize a preliminary trade deal agreement with China @34% (24% +10% Fentanyl levy), Mexico (15% +10%), Canada (15% +10%) and EU (10%) by July 9; but will extend the tariff pause to at least December 2025 for finalization of trade deals with all others including the above countries.

Market impact:

Wall Street Futures surged early Friday, June 27, 2025, on easing of Trump trade and Fed war tensions. On Thursday, Trump sounded ultra-hawkish on Fed Chair Powell, followed by the WSJ article, indicating Trump may pick the next Fed Chair as early as September-October, who would be ultra-dovish and media savvy (TV appeal). These stories caused a plunge in the US dollar index, as EUR, GBP, and CAD surged on the question of Fed credibility.  But on Thursday, June 26, Trump & Co. sounded less hawkish on Fed Chair Powell. Eventually, the ease of Trump’s Fed war tensions coupled with trade and Iran war tensions-risk assets surged, including the USD, while Gold slipped.

The US, even under any Trump-like megalomaniac President, will never try to weaken the USD or its credibility, which can harm the global reserve currency status; there is no global competitor of the USD despite the rising influence of the EUR and Yuan. The USD is the primary weapon of the US for its global influence and hegemony. The never-ending global demand for USD as the preferred transaction and settlement currency made it easy for the US to open a 24/7 printing machine.

Wall Street Futures were also boosted as the US Federal Reserve proposed changes to ease the enhanced supplementary leverage ratio (SLR) for large banks. This will ease the burden of higher regulatory capital requirements:

·       Fed's Bowman: Changes would build resilience in US Treasury markets and reduce market dysfunction

·       Fed's Powell: It is prudent for the Fed to reconsider the rule, given the stark increase in the level of relatively safe assets on bank balance sheets.

·       Fed's Barr and Kugler to oppose proposed changes, according to prepared statements

Technical outlook: DJ-30, NQ-100, and Gold

Looking ahead, whatever may be the narrative, technically Dow Future (CMP: 42600) now has to sustain over 43000-43100 for a further rally towards 43200/43600*-44000/45300 in the coming days; otherwise sustaining below 42900-42800, DJ-30 may again fall to 41900/41700-41400/41000* and further 40600/40100-39200/38000 in the coming days.

Similarly, NQ-100 Future (21900) has to sustain over 22400-22500/22700 for a further rally to 22800/23000* in the coming days; otherwise, sustaining below 21900, NQ-100 may again fall to 21900/20900-20700/20200 and 19890/18300-17400/16400in the coming days.

Technically Gold (CMP: 3350) has to sustain over 3375-3395 for a further rally to 3405/3425*-3450/3505*, and even 3525/3555 in the coming days; otherwise sustaining below 3365, Gold may again fall to 3340/3320-3300*/3280 and 3255/3225-3200/3165* and further to 3130/3115*-3075/3015-2990/2975-2960*/2900* and 2800/2750 in the coming days.