Fed Watch – 7/11/2025

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Thank you for joining us for this edition of Fed Watch. Today is July 11, 2025. And the FOMC meeting minutes that came up this week showed that the word uncertainty, or a derivative of that word was used, I think it was a record 29 times in the minutes. And frankly, you can understand the uncertainty and let’s go through the data and see what we’re looking at and what it has all meant so far.

The Redbook data that came out for retail sales, weekly retail sales for the end of June, it’s holding an elevated level. It’s at 5.9%, which is higher than the long-term normal, which is good. Department stores were lagging at minus 0.6%, but discount stores more than made up for that with a 6.2% increase. So minus 0.6 and plus 6.2, nets out to a 5.9 overall, comfortably high. And it’s a good indication that the consumers are out there doing their job, which is consuming. So if the Fed looks at this data, and I’m sure they do, and they would say, the economy’s okay, we don’t need to worry about lowering interest rates. The WEI data is holding up very well also, that’s the Dallas Federal Reserve weekly economic indicator. And again, it’s going to tell the Federal Reserve, wait and see, there’s nothing that we need to act upon real quickly.

Probably falling into that same camp, although it’s a series that they wouldn’t look at, it’s our own ITR financial leading indicator, and that posted a good gain in June. It’s only one month up, so it’s nothing to get all sorts of excited about, but we’ll take up, up is good, and helpful in terms of where this economy is going.

In terms of wholesale trade, non-durable remains lackluster. May was actually weaker than April, which is unusual, and May was 0.0% change over last year. So that isn’t good, but the durable side is doing quite well. The 12/12 rate-of-change is rising in phase B. So that nets out to the economy continuing to grow also. So I think the Fed just needs to see some signs of the economy weakening. Unemployment isn’t really that, unless they have a really good crystal ball that tells them that unemployment rates are going to be going up. They’re not high enough to really get excited about. Employment growth continues, and the slow growth has to take into consideration the fact that we’ve been deporting so many people, that’s going to dampen the employment growth. The Fed knows that also. So again, wait and see, makes a great deal of sense.

The marketplace, the futures market seems to be saying, they’re going to lower rates in September or October or November or December. And the majority of the input says that that’s what they’re going to be doing, something 25, 50 basis points. The net effect of all that folks is that it will help curtail the automobile delinquency rate. We’re already seeing some improvement in the credit card delinquency rate, but it will bring that rate down further. That’d be the biggest one off that you can expect from a reduction in the Fed funds rate in the immediate term. 25, 50 basis points is not going to do anything to significantly move the needle.

This economy is continuing to grow, albeit at a very mild pace. The uncertainty because of the tariffs continues to be out there, but the bond market, mortgage market, they’re saying flat. 30-year mortgage is at 6.72% virtually unchanged from last week. 10-year is at 4.407, and that’s essentially unchanged from last week also. So we’re not getting a whole lot of indications from the bond market or the mortgage market that rates are likely to be coming down. If they do in September, great big advantage of it. If they don’t, the economy is still going to be improving.

Please join me and Lauren Saidel-Baker July 29th in the afternoon for our next Executive Series Webinar. We’ll be talking about uncertainty, how to move through it, what this all means, not only for 2026, but 27, 28, 29, and the big one, 2030. How does this all line up? That’s what we’ll be tackling on July 29th. Please join us. Thank you.