Stocks and gold waved after a less hawkish Fed hold and QT taper

·       Trump warned the Fed for holding rates too long as his short-term pain strategy from April is set to push the US economy into stagflation

·       On early Thursday, Wall Street Futures and gold slumped, while USD surged as Trump warned Fed is making a policy mistake by not cutting rates in advance

·       Trump warned the Fed that his tariffs tantrum from April’25 is set to destabilize the US economy into stagflation in the ‘transition’ period

On Wednesday (19th March 25), apart from the ongoing Trump trade war tantrum, Ukraine and Gaza war ceasefire/war progress, all focus of the market was on the FOMC meeting, the Fed’s policy decisions, a summary of economic projections and Chair Powell’s pressers.

On March 19, 2025), ss highly expected, that the Fed holds all of its key policy rates. Fed kept unchanged target range for the Federal Fund's Rate (FFR-interbank rate-SOFR) to 4.38%% (median of 4.50-4.25%); primary credit rate (repo rate) +4.50%; IOER (reverse repo rate) +4.40%; overnight repurchase (ONRP) agreement rate (ON RP) +4.50% and ONRRP (Overnight Reverse Repurchase Agreement Rate) to +4.25%. The Fed also reduced the pace of QT for USTs from $25B/M to $5B/M from April’25.

Full text of Fed’s statement: March 19, 2025

Federal Reserve issues FOMC statement

“Recent indicators suggest that economic activity has continued to expand at a solid pace. The unemployment rate has stabilized at a low level in recent months, and labor market conditions remain solid. Inflation remains somewhat elevated.

The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Uncertainty around the economic outlook has increased. The Committee is attentive to the risks to both sides of its dual mandate.

In support of its goals, the Committee decided to maintain the target range for the federal funds rate at 4-1/4 to 4-1/2 percent. In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks.

The Committee will continue reducing its holdings of Treasury securities agency debt and agency mortgage‑backed securities. Beginning in April, the Committee will slow the pace of the decline of its securities holdings by reducing the monthly redemption cap on Treasury securities from $25 billion to $5 billion. The Committee will maintain the monthly redemption cap on agency debt and agency mortgage-backed securities at $35 billion. The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective.

In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals. The Committee's assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.

Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michael S. Barr; Michelle W. Bowman; Susan M. Collins; Lisa D. Cook; Austan D. Goolsbee; Philip N. Jefferson; Adriana D. Kugler; Alberto G. Musalem; and Jeffrey R. Schmid. Voting against this action was Christopher J. Waller, who supported no change for the federal funds target range but preferred to continue the current pace of decline in securities holdings.”

Implementation Note issued March 19, 2025

Decisions Regarding Monetary Policy Implementation

“The Federal Reserve has made the following decisions to implement the monetary policy stance announced by the Federal Open Market Committee in its statement on March 19, 2025:

·       The Board of Governors of the Federal Reserve System voted unanimously to maintain the interest rate paid on reserve balances at 4.4 percent, effective March 20, 2025.

As part of its policy decision, the Federal Open Market Committee voted to direct the Open Market Desk at the Federal Reserve Bank of New York, until instructed otherwise, to execute transactions in the System Open Market Account in accordance with the following domestic policy directive:

Effective March 20, 2025, the Federal Open Market Committee directs the Desk to:

·       Undertake open market operations as necessary to maintain the federal funds rate in a target range of 4-1/4 to 4-1/2 percent.

·       Conduct standing overnight repurchase agreement operations with a minimum bid rate of 4.5 percent and with an aggregate operation limit of $500 billion.

·       Conduct standing overnight reverse repurchase agreement operations at an offering rate of 4.25 percent and with a per-counterparty limit of $160 billion per day.

·       Roll over at auction the amount of principal payments from the Federal Reserve's holdings of Treasury securities maturing in March that exceeds a cap of $25 billion per month.

·       Beginning on April 1, roll over at auction the amount of principal payments from the Federal Reserve's holdings of Treasury securities maturing in each calendar month that exceeds a cap of $5 billion per month.

·       Redeem Treasury coupon securities up to these monthly caps and Treasury bills to the extent that coupon principal payments are less than the monthly caps.

·       Reinvest the amount of principal payments from the Federal Reserve's holdings of agency debt and agency mortgage-backed securities (MBS) received in each calendar month that exceeds a cap of $35 billion per month into Treasury securities to roughly match the maturity composition of Treasury securities outstanding.

·       Allow modest deviations from stated amounts for reinvestments, if needed for operational reasons.

·       In a related action, the Board of Governors of the Federal Reserve System voted unanimously to approve the establishment of the primary credit rate at the existing level of 4.5 percent.

This information will be updated as appropriate to reflect decisions of the Federal Open Market Committee or the Board of Governors regarding details of the Federal Reserve's operational tools and approach used to implement monetary policy.”

NY Fed: OPERATING POLICY (QT): Statement Regarding Reinvestment of Principal Payments from Treasury Securities, Agency Debt, and Agency Mortgage-Backed Securities-March 19, 2025

At the meeting that concluded on March 19, 2025, the Federal Open Market Committee (FOMC) decided to slow the pace of decline in its securities holdings. Beginning in April, the Committee directed the Open Market Trading Desk at the Federal Reserve Bank of New York (the Desk) to reduce the monthly redemption cap on Treasury securities from $25 billion to $5 billion. The Committee will continue reducing holdings of agency debt and agency mortgage-backed securities (MBS) up to a monthly cap of $35 billion. Any principal payments received from agency debt and agency MBS holdings in excess of the $35 billion monthly cap will be reinvested into Treasury securities.

Consistent with current practice, the redemptions of Treasury securities each calendar month will include Treasury coupon securities and, to the extent that maturing coupon securities are less than the monthly cap, Treasury bills.  The Desk will roll over at auction the amount of principal payments from System Open Market Account (SOMA) holdings of Treasury securities maturing during each calendar month that exceeds the cap amount for that month. 

The Desk will allocate Treasury coupon rollover amounts across the month’s coupon maturity dates in proportion to total SOMA coupon maturities on each date.  The Desk will separately allocate bill rollover amounts across the month’s bill maturity dates in proportion to total SOMA bill maturities on each date.  Rollovers will continue to be accomplished by placing non-competitive bids at Treasury auctions; the bids will be allocated across the securities being issued on each auction date in proportion to their announced offering amounts.

Should principal payments on SOMA holdings of agency debt and agency MBS exceed the $35 billion redemption cap, the Desk will announce the monthly amount of Treasury secondary market reinvestment purchases and a tentative schedule of purchase operations on or around the ninth business day of each month. 

Secondary market purchases will generally be conducted over one month until the next announcement. Under this guidance, the Desk plans to distribute secondary market Treasury reinvestment purchases across nominal coupons, bills, Treasury Inflation-Protected Securities, and Floating Rate Notes across a range of maturities to roughly match the maturity composition of outstanding securities.”

Full text of Fed Chair Powell’s opening statement: March 19, 2025

My colleagues and I remain squarely focused on achieving our dual mandate goals of maximum employment and stable prices for the benefit of the American people. The economy is strong overall and has made significant progress toward our goals over the past two years. Labor market conditions are solid, and inflation has moved closer to our 2 percent longer-run goal, though it remains somewhat elevated.

In support of our goals, today the Federal Open Market Committee decided to leave our policy interest rate unchanged. We also made the technical decision to slow the pace of decline in the size of our balance sheet. I will have more to say about these decisions after briefly reviewing economic developments.

Economic activity continued to expand at a solid pace in the fourth quarter of last year, with GDP rising at 2.3 percent. Recent indications, however, point to a moderation in consumer spending following the rapid growth seen over the second half of 2024.  Surveys of households and businesses point to heightened uncertainty about the economic outlook. It remains to be seen how these developments might affect future spending and investment.

In our Summary of Economic Projections, the median participant projects GDP to rise 1.7 percent this year, somewhat lower than projected in December, and to rise a bit below 2 percent over the next two years.

In the labor market, conditions remain solid. Payroll job gains averaged 200 thousand per month over the past three months. The unemployment rate, at 4.1 percent, remains low and has held in a narrow range for the past year. The jobs-to-workers gap has held steady for several months. Wages are growing faster than inflation and at a more sustainable pace than earlier in the pandemic recovery.

Overall, a wide set of indicators suggests that conditions in the labor market are broadly in balance. The labor market (now) is not a source of significant inflationary pressures. The median projection for the unemployment rate in the SEP is 4.4 percent at the end of this year and 4.3 percent over the next two years.

Inflation has eased significantly over the past two years but remains somewhat elevated relative to our 2 percent longer-run goal. Estimates based on the Consumer Price Index and other data indicate that total PCE prices rose 2.5 percent over the 12 months ending in February and that, excluding the volatile food and energy categories, core PCE prices rose 2.8 percent.

Some near-term measures of inflation expectations have recently moved up. We see this in both market- and survey-based measures, and survey respondents, both consumers and businesses, are mentioning tariffs as a driving factor. Beyond the next year or so, however, most measures of longer-term expectations remain consistent with our 2 percent inflation goal. The median projection in the SEP for total PCE inflation is 2.7 percent this year and 2.2 percent next year, a little higher than projected in December. In 2027, the median projection is at our 2 percent objective.

Our monetary policy actions are guided by our dual mandate to promote maximum employment and stable prices for the American people. At today’s meeting, the Committee decided to maintain the target range for the federal funds rate at 4-1/4 to 4-1/2 percent.

Looking ahead, the new Administration is in the process of implementing significant policy changes in four distinct areas: trade, immigration, fiscal policy, and regulation. It is the net effect of these policy changes that will matter for the economy and the path of monetary policy. While there have been recent developments in some of these areas, especially trade policy, uncertainty around the changes and their effects on the economic outlook is high. As we parse the incoming information, we are focused on separating the signal from the noise as the outlook evolves.

As we say in our statement, in considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will assess incoming data, the evolving outlook, and the balance of risks. We do not need to be in a hurry to adjust our policy stance, and we are well-positioned to wait for greater clarity.

In our SEP, FOMC participants wrote down their individual assessments of an appropriate path for the federal funds rate, based on what each participant judged to be the most likely scenario going forward—an admittedly challenging exercise at this time, in light of considerable uncertainty. The median participant projects that the appropriate level of the federal funds rate will be 3.9 percent at the end of this year and 3.4 percent at the end of next year, unchanged from December.

While these individual forecasts are always subject to uncertainty, as I noted, uncertainty today is unusually elevated. And, of course, these projections are not a Committee plan or a decision. The policy is not on a preset course. As the economy evolves, we will adjust our policy stance in a manner that best promotes our maximum employment and price stability goals. If the economy remains strong and inflation does not continue to move sustainably toward 2 percent, we can maintain policy restraint for longer.

If the labor markets were to weaken unexpectedly or inflation was to fall more quickly than anticipated, we can ease policy accordingly. Our current policy stance is well-positioned to deal with the risks and uncertainties that we face in pursuing both sides of our dual mandate.

At today’s meeting, we also decided to slow the pace of decline in our balance sheet. Since we began balance sheet runoff, our securities holdings have declined by more than $2 trillion. While market indicators continue to suggest that the quantity of reserves remains abundant, we have seen some signs of increased tightness in money markets. Beginning in April, the monthly cap on Treasury redemptions will be lowered from $25 billion to $5 billion. Consistent with the Committee’s intention to hold primarily Treasury securities in the longer run, we are leaving the cap on agency securities unchanged. This action has no implications for our intended stance on monetary policy and should not affect the size of our balance sheet over the medium term.

The Committee also continued its discussions as part of our five-year review of our monetary policy framework. At this meeting, we focused on labor market dynamics and our maximum employment goal. As we have indicated, our review will include outreach and public events involving a wide range of parties, including Fed Listens events around the country and a research conference in May. Throughout this process, we will be open to new ideas and critical feedback, and we will take on board lessons of the last five years in determining our findings. We intend to wrap up the review by late summer.

The Fed has been assigned two goals for monetary policy—maximum employment and stable prices. We remain committed to supporting maximum employment, bringing inflation sustainably to our 2 percent goal, and keeping longer-term inflation expectations well anchored.

Our success in delivering on these goals matters to all Americans. We understand that our actions affect communities, families, and businesses across the country. Everything we do is in service to our public mission. We at the Fed will do everything we can to achieve our maximum employment and price stability goals. “

Highlights of FOMC policy statement: March 19, 2025         

·       Federal Reserve rate decision: Rates held unchanged, as highly expected

·       US Interest Rate Decision Actual 4.5% (Forecast 4.5%, Previous 4.5%)

·       Fed Median Rate Forecast for 2025 (Current) Actual 3.875% (Forecast 3.875%, Previous 4.375%)

·       Fed to slow balance-sheet runoff starting April 1st

·       FOMC median forecast shows 50 BPS of rate cuts in 2025 to 3.9% (unchanged from Dec’24 SEP)

·       Uncertainty around the economic outlook has increased

·       Fed sharply reduces 2025 growth projection and marks up inflation; i.e. Fed sees stagflation-like economic situation in 2025 amid Trump policy tantrum

·       Fed omits language about Fed's goals being roughly in balance

·       FOMC median forecast shows 2025 GDP at 1.7%, vs 2.1% in December projections

·       FOMC median 2025 unemployment projection rises to 4.4%

·       Fed officials' median view of Fed Funds Rate in the longer run 3.0% (prev 3.0 %)

·       Fed officials’ median view of Fed Funds Rate at end-2025 3.9% (prev 3.9%)

·       Fed vote on policy included one dissent from Governor Waller, who supported no change on policy rate but preferred no change to balance sheet runoff (QT)

·       The monthly Treasury redemption cap will decline to $5 billion from $25 billion; the monthly redemption cap on mortgage-backed securities is unchanged at $35 billion

·       Beginning in April Fed will slow the pace of balance sheet runoff

·       Fed Median Rate Forecast (Next 2 Yrs) Actual 3.125% (Forecast 3.125%, Previous 3.375%)

·       Fed Median Rate Forecast (Long Run) Actual 3% (Forecast 3.125%, Previous 3%)

·       Fed holds interest rates steady, still sees two cuts coming this year

·       Fed Officials' median view of the Fed Funds Rate in the longer run is 3% unchanged compared to the previous

·       Fed left rates unchanged as expected, and in the SEP, sharply reduced US GDP expectations & increased Unemployment rate and inflation expectations

·       Fed policymakers see 1.7% GDP growth in 2025 versus 2.1% in December, see longer-run growth at 1.8% vs 1.8% in December

·       Fed projections show economic growth slowing in 2025 and inflation remaining further above the 2% target

·       Fed projections show that 4 of 19 officials see no cuts in 2025, 4 see one cut, 9 see 2 cuts, and 2 see 3 cuts.

·       Fed projections imply 50 BPS of rate cuts in 2025, 50 BPS more in 2026

·       Futures imply traders see a 62.1% chance of the Fed resuming rate cuts in the June meeting, which was 57% before the Fed decision

Highlights of Fed Chair Powell’s statements/comments in the Q&A: 19th March’25

·       Recent indications point to a moderation in consumer spending

·       Surveys point to heightened economic uncertainty

·       It remains to be seen how Trump's uncertainty will affect the outlook

·       The Fed made the technical decision to slow the pace of decline in the balance sheet

·       The economy is strong. Labor market conditions are solid. Inflation remains somewhat elevated.

·       The labor market is now no longer a source of inflationary pressures

·       Inflation expectations have recently moved up, with tariffs as a driving factor

·       PCE and core prices likely rose 2.5% and 2.8% in December

·       Longer-term inflation expectations are consistent with the 2% goal

·       The uncertainty around policy changes and the economic effects is high

·       The new administration is implementing significant policy changes, the net effect is what will matter

·       I am focused on separating signal from noise

·       We do not need to be in a hurry, we are well-positioned to wait for better clarity.

·       Uncertainty is unusually elevated, policy is not on a preset course

·       If the economy remains strong, we can maintain policy restraint for longer

·       If the labor market weakens we can ease if needed

·       We have seen some signs of increased tightness in money markets

·       Market indicators suggest the quantity of reserves is abundant

·       In our framework review work, today we focused on labor market dynamics and the maximum employment goal

·       It will be difficult to know how much inflation from tariffs

·       It is too soon to say if it will be appropriate to look through the effect of tariff inflation

·       A good part of marked-up inflation comes from tariffs

·       My base case is that there is no policy signal from tariffs, but I can't know that

·       There is inertia in changing forecasts amid high uncertainty

·       A 'good part' of higher inflation forecasts is due to tariffs

·       The policy is in a good place

·       Survey data show a significant rise in uncertainty and downside risks

·       There may be a delay in further inflation progress this year

·       Inflation has started to move up, partly in response to tariffs, especially in Goods

·       We see pretty solid hard economic data

·       We will be watching inflation expectations very very carefully

·       Longer-term inflation expectations are mostly well-anchored

·       I don't see much increase in long-term expected inflation

·       The base case is that inflation will be transitory

·       On balance, people wrote down similar forecasts to last time. It is hard to know how this will work out

·       The relationship between survey data and actual economic data hasn't been very tight

·       The costs of waiting, given the solid economy, are still low

·       Hiring rate and layoffs are both low, a meaningful increase in layoffs would probably translate quickly into unemployment

·       We've had a low-firing, low-hiring situation

·       Recent mass layoffs for Federal workers are not meaningful at a national level, but they may be terrible for local and personal levels.

·       Strong goods inflation readings in the recent two months, if persistent, must have to do with tariffs.

·       If an inflationary impulse will go away on its own, it's not the right thing to tighten policy.

·       Not right to tighten if inflation goes away on its own

·       There can be situations where the Fed's goals are in tension.

·       If the Fed's goals need to be balanced against each other, it's challenging, but that's not the current situation.

·       Forecasters have raised their possibility of a recession somewhat, but it's not high.

·       The University of Michigan inflation expectations reading is an outlier, but we do take notice.

·       It's hard to say when we'll have a forecast we can trust, I think we'll get clarity on the outlook, but it's hard to say when

·       We will know in a couple of months if higher goods inflation in the first two months of the year was from tariffs.

·       We're looking for direct evidence that particular pieces of inflation are caused, or not caused, by tariffs.

·       Housing services inflation has been behaving well, moving down in a good way.

·        Sentiment has fallen off, but the economy seems to be healthy

·       The drop in sentiment is partly to do with big changes by the administration on policy

·       Flows in and out of TGA got us thinking about balance sheet reductions

·       This was a good time to slow balance sheet shrinkage

·       If we cut the pace of balance sheet runoff, it means we will make reductions more slowly, but for a longer

·       I still think reserves are abundant

·       We said we would stop balance sheet shrinkage somewhat above the ample level; we are still far from that, we will approach that level more slowly

·       Tariffs tend to bring growth down and inflation up

·       I'm not dismissing the rise in short-term inflation expectations, but there's no story of an increase in long-term expectations

·       There's no plan to taper MBS runoff. We may or may not stop MBS runoff, we haven't made any decisions. We strongly desire MBS to roll off the Fed's balance sheet

·       We'd look carefully at allowing MBS to roll off, even after we stop shrinking the total balance sheet

·       We are at a place where we can cut, or hold at what is a restrictive stance of policy

·       Fed's Powell when asked if the Fed might cut rates in May: We are not going to be in any hurry to move on rate cuts

·       The Fed watches for material changes to financial conditions that are persistent. We want to focus on the hard data

·       Policymakers widely raised their estimates of the risks to the Fed's goals

·       Removing 'roughly in balance' to describe risks from the statement isn't meant to convey a signal; it’s just an adjustment of policy language as per changed financial conditions

·       If the soft data affects the hard data we will know it very quickly, but we don't see that yet

·       I don't see a reason to think we are looking at a replay of the '70s hard landing while trying to bring inflation back to target

·       Underlying inflation before tariffs was 2.5%

·       Inflation is still running in the 2s, with a pickup from tariffs

·       Fed staff forecasts assume full tariff retaliation

·       The Fed staff have a placeholder forecast on the effect of tariffs

·       There was pretty strong support for the balance sheet decision

Overall, the Fed kept the federal funds rate unchanged at 4.25%-4.5% during its March 2025 meeting, extending the pause in its rate-cut cycle that began in January, and in line with expectations. Policymakers noted that uncertainty around the economic outlook has increased but still anticipate reducing interest rates by 50 bps this year, the same as in the December projection.

Meanwhile, GDP growth forecasts were revised lower for this year to 1.7% from 2.1% seen in December. Growth projections were also revised down for 2026 (1.8% vs 2%) and 2027 (1.8% vs 1.9%). In contrast, PCE inflation is seen higher in 2025 (2.7% vs 2.5%) and 2026 (2.2% vs 2.1) but the forecast was kept at 2% for 2027. The unemployment rate is seen slightly higher this year at 4.4% (vs 4.3%) but the projection was held steady at 4.3% for both 2026 and 2027. In April, the Fed will slow the pace of the decline of its securities holdings by reducing the redemption cap on Treasury securities from $25 billion to $5 billion.

Fed sees stagflation as it projected lower economic (GDP) growth, higher inflation and higher unemployment rate for 2025. Fed Holds Rates as unanimously expected; signalled further tapering of QT and virtually blamed Trump policy uncertainty for the stagflationary US economic outlook. Although the official Fed reduced the QT pace from an earlier $25B/M to $5B/M for treasury securities (UST/TSY bonds), in reality, the real QT rate was already for USTs was already in that zone.

But Powell sounded less hawkish on Trump tariffs and the Trumpflation narrative. Powell was cautious in his assessment of how President Trump's trade war might shape the economy, citing the possibility that tariffs' impact on consumer prices would be ‘transitory’. Overall, Powell played safe and avoided a direct head-on collision with Trump on fiscal policy issues.

Conclusions:

Although the Fed generally talks about 2.0% PCE inflation as a price stability target, in reality, it maintains 1.5% core/total PCE inflation and 2.3% core/total CPI inflation; i.e. around 1.9% average inflation (PCE+CPI) targets, US Congress has entrusted along with maximum employment 96.0-95.5% of the labor force; i.e. 4.0-3.5% headline unemployment rate. Fed needs to bring down average core inflation by around 100 bps to reach the target.

Fed is now cutting rates while doing QT, which is two contra monetary policy tools. As a result, bond yields remain elevated at around 4.50% and the real economy may not be getting the full effect of a 100 bps rate cut in 2024. The market usually discounts Fed rate cuts well in advance in line with regular Fed talks and official dot plots.

Thus Fed may effectively close the QT first by September-December’25 at a B/S size of around $6.50T from present levels of around $6.75T. From April’25, the Fed will reduce QT rates from $25B to only $5B, which is not significant and may finally close the QT for USTs by June-December’25, while the MBS run-off (MBS-QT) will go on at the official pace of $35B/M. Nowadays, UST matters to US bond yield, not MBS.

Thus Fed will permanently remove MBS from its balance sheet to replace it with USTs in the future in a calibrated manner, which may be equivalent to a mini-QE.  Fed may keep the B/S size at around $6.50T, which would be 22% of projected nominal GDP around $30T by 2025, which may be an ideal level for the Goldilocks nature of the US economy and may not cause another REPO/Funding market crisis as we have seen late 2019 under Trump and Powell-1.0. Now Fed is effectively in the last stage of QT tapering or balance sheet run-off for USTs.

Bottom line

To fight a highly probable US stagflation or even recession-like economic situation amid the Trump trade war tantrum, the Fed may first close QT fully by September-December’25 and also resume the rate cut cycle for 50 bps cumulative in 2025. Fed may provide a definitive plan to end the QT in its June-September’25 meeting and close the same by September-December’25 and also cut rates by 25 bps each in June and December’25. But if the concern of a Trumpcession intensifies further and the employment situation deteriorates meaningfully (unemployment surges over 4.5%), the Fed may also cut another 25 bps in September’25. At the present run rate and any potential impact of moderate Trump trade war after H1CY25, the US core inflation may dip towards 2.0% targets by mid to late 2026.

Market Wrap:

On Wednesday (19th March 25), Wall Street Futures and gold surged on a less hawkish Fed hold; Powell downplayed Trumpflation as transitory and sounded more dovish than expected.

But on early Thursday, Wall Street Futures and gold slumped, while USD surged as Trump warned Fed is making a policy mistake by not cutting rates as his tariffs tantrum from April’25 is set to destabilize the US economy into stagflation in the ‘transition’ period; i.e. Trump warned short term pain for long term gain.

On late Wednesday (19th March 25), US President Trump Truthed after Fed hold:

“The Fed would be MUCH better off CUTTING RATES as U.S. tariffs start to transition (ease!) their way into the economy. Do the right thing. April 2nd is Liberation Day in America!!!”

Earlier, Wall Street Futures were boosted by a report that the Trump admin is proactively negotiating with countries having the targets of reciprocal tariffs to reduce their exorbitantly high tariffs on US goods so that the US doesn’t have to impose higher tariffs on exports from those countries. But now, it seems that Trump may not oblige and he may be intentionally creating an economic disruption to force the Fed to a quicker rate cuts and end of QT fully.

Weekly-Technical trading levels: DJ-30, NQ-100, Gold and Dax

Looking ahead, whatever the fundamental narrative, technically Dow Future (CMP: 43850) now has to sustain over 44050 for any further rally to 44250/44400-44500/44800 and 45000/45200-45300/45500 and 45700/45800-45900/46000 in the coming days; otherwise sustaining below 44000, DJ-30 may again fall to 43800/43675-43300/43150 and 42800/42700-42000/41900 in the coming days.

Similarly, NQ-100 Future (20915) has to sustain over 21050 for a further rally to 21300/21500-21700/21850 and 22050/22200-22350/22500 and 22700/23000-23300/23500 in the coming days; otherwise, sustaining below 21000, NQ-100 may again fall to 20900/20600-20400/20150 in the coming days.

Technically, DAX-40 (22500) now has to sustain over 22700 for a rally to 22800/22/900-23000/23500 and 23600/23700-23800/24000; otherwise, sustaining below 22650/22550, may again fall to 22250/21850-21700/21100 and 20800/20000-19700/19000-18850 in the coming days.

Also, technically Gold (CMP: 2985) has to sustain over 3005-3010 for a further rally t 3025/3060*-3075/3100 and 3125/3150-3200/3225; otherwise sustaining below 3000-2995, Gold may again fall to 29650/2925-2900/2880 and 2850/2835-2810/2780-2780 and 2745/2725-2695/2665 and further 2635/2600-2585/2560 in the coming days.