FOMC Watch: Bygones are Bygones

Please find attached the latest FOMC watch. To summarize:

• There are valid reasons for the Fed to cut as soon as next month. Most important of which is the labor market, which is clearly weakening. Underlying inflation isn't as bad as the Fed's own forecast would make you believe. Furthermore, regarding tariffs there's no reason to wait for September as they're likely to end up being only a relatively minor nuisance with regards to prices.
• In his testimony before Congress this week Chairman Powell closed the door on a July cut and there's little to be gained to bet on a 'summer surprise' - the Fed will simply cut in September. Still, odds are stacked towards a nasty labor market surprise further down the road. Thus, the risks are tilted towards a dovish repricing of US rates.