Forward Guidance The Fed Is Cornered By Stagflation After Jobs Collapse | Weekly Roundup
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Sep 5, 2025 This week, market watchers are grappling with disappointing job growth numbers, raising concerns about the economy's direction. The potential for a Federal Reserve interest rate cut is debated amidst rising stagflation worries. As tariffs' future hangs in the balance, the conversation turns to liquidity challenges in the economy. The allure of gold as an investment rises, signaling a need for protective strategies in uncertain times. Insights into the tech sector's relationship with AI add yet another layer to the discussion.
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Price September Cuts Conservatively
- Do not expect a September Fed reversal to 50bps without clear CPI cooperation.
- Treat a 25bps cut as highly likely but view 50bps as conditional on falling inflation prints.
Stagflation Doesn’t Need 1970s Shock
- Stagflation can appear even with moderate inflation if growth stalls near zero.
- Fed stimulus risks routing into commodities, making policy less effective against stagflation.
Gold Captures Both Inflation And Real-Rate Risks
- Gold benefits from both fiscal debasement and falling real rates, making it a two-way hedge.
- Institutional allocation to gold remains low despite strong performance, suggesting room to run.