Equity markets, particularly in the U.S., are focusing on the prospect of an imminent interest rate cut rather than the geopolitical and economic risks looming over investors. This focus is reinforced by recent strong economic data, which boosts market optimism and investor confidence in controlled growth and contained inflation.
Current Economic Context
The U.S. GDP for Q2 was revised upward, showing a stronger-than-expected economy. Inflation remains under control: the core PCE was released in line with expectations at +2.90% versus +2.80% previously. These indicators suggest that the Fed could be in a position to lower rates in the coming months to support growth.
Next week, attention will turn to the employment report on Friday, closely followed by the Consumer Price Index (CPI) on September 11. These two reports will provide the last major data points before the Fed meeting on September 16–17, which will be decisive in guiding U.S. monetary policy.
Political Influence on the Fed
However, it is important to remember that U.S. monetary policy never operates in a political vacuum. The Trump administration has repeatedly sought to influence the Fed, creating additional pressure on the central bank’s independence. These interventions, through public statements or criticisms of rate decisions, have polarized markets and generated uncertainty about the real trajectory of monetary policy.
This dynamic extends beyond U.S. borders: the Fed, as a pillar of the global financial system, indirectly influences other central banks’ monetary policies and global capital flows. Any political pressure on the Fed can therefore resonate worldwide, affecting currencies, sovereign rates, and investment decisions.
Investment Recommendation
For investors, this combination of solid economic indicators and political pressure on the Fed presents an interesting opportunity: anticipated volatility could create attractive entry points in the equity market, while bonds and other safe-haven assets remain essential to manage risks tied to political uncertainty. In other words, holding shares in resilient sectors or stocks exposed to U.S. monetary policy can offer an attractive return potential in the short to medium term.