The financial community is highly attentive to the decisions and ensuing announcements expected after Wednesday’s Fed meeting. Bitcoin 
$103,390 has already started to pull back, suggesting potential market nervousness leading up to the meeting. Therefore, setting stop levels cautiously against possible downward breaches should be prioritized. But what other key details demand attention?
Focus on Tariffs and the Fed
Jerome Powell’s statements will be the main focal point. In the previous meeting, interest rates were left unchanged, and it seems this will be repeated. Fed officials have consistently stated that a rate cut is not part of the agenda for this meeting, aligning with market expectations.
President Trump’s tariffs created considerable chaos, characterized by inconsistency and uncertainty. Despite his initial refusal to back down, Trump had to soften his stance shortly thereafter. This volatility is further complicated by Trump’s implications that he could remove Powell from his position, though later acknowledging he won’t do so before the end of Powell’s term. Such a decision would instigate legal proceedings, a scenario unpacked previously.
Last week, the tariffs’ initial effects emerged. Friday’s higher-than-expected Non-Farm Payroll data of 177,000 blocked messages suggesting extreme relaxation for June, indicating robust sentiments.
Insight into the Fed May Meeting
Powell is likely to maintain a tone similar to previous announcements if employment figures remain stable. Consensus exists that tariffs’ inflationary impacts will be observed belatedly, so no drastic shifts are anticipated.
The meeting won’t adopt an extremely dovish tone, and Trump-related inquiries addressed to the Fed Chairman are expected. While questions about potential removal will arise, Powell will avoid comments inciting disputes with a purportedly independent Fed.
Robust earnings reports from major US tech companies last week enabled tariff losses to be wiped from stock indices. Neither the potential recovery of altcoins nor the broader stock market concerns Powell or Trump, rendering assumptions of dovish signals due to market fragility unfounded.
Elyas Galou, a senior investment strategist at Bank of America, articulated surprise over market resilience amidst significant global trade upheavals. He noted the Trump administration’s strategy emphasizes bringing negative news forward, signaling market focus over the next 100 days on potential reductions in tariffs and taxes.
A crucial factor lies in the upcoming signing of the first tariff agreement, as noted in Bessent’s recent declaration. Resolving tariff issues with a significant partner will facilitate several outcomes:
- Trade partners discern exact US demands for reconciliation.
- The US acknowledges the tariffs’ unsustainability in their current form.
- Confidence builds around negotiating similar agreements with all partners.
- Other partners better understand US expectations to expedite resolution.
- Expectations for tariff resolution will drive risk markets upward.
Exciting developments are anticipated in the forthcoming days.
