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The Federal Reserve maintained its cautious stance today, keeping rates unchanged as markets await clarity on inflation and economic growth. Powell’s speech suggested a more hawkish approach than previously expected but lacked conviction, leading yields to fluctuate slightly before settling back into stability.
Donald Trump’s criticism of the Fed continues to resonate, with his calls for lower interest rates gaining traction despite the central bank’s cautious outlook. The Fed appears content without decisive action, as its balance sheet offers sufficient liquidity and inflation remains elevated yet manageable.
Meanwhile, the AI race’s impact on global markets remains uncertain. While companies like Microsoft and Meta are investing heavily in AI infrastructure, their long-term benefits are still unclear. Utility stocks showing recoveries this week highlight the sector’s resilience, though broader market reactions to AI developments are unpredictable.
In summary, the Fed’s cautious approach and ongoing confusion about AI’s impact drive market sentiment. Investors remain closely monitoring developments as both central banks and tech leaders navigate uncertain economic waters.
Source: https://www.ft.com/content/9eba03c5-ee95-43c3-9ea1-749b6153dff2