Video Update - The Fed, Jobs Report, and What Else to Expect for the Rest of July

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Welcome to the Real Income Report update for the week of July 28, 2025. We have almost made it to August, four weeks into earnings season with all sorts of interesting developments happening in the markets.

The same theme continues from recent weeks: stocks remain in an uptrend, everyone believes everything will be great. Nirvana earnings were off slightly today. We have these supposedly great trade deals with Europe and Japan, though there are no real details, just announcements of trade deals. We are going to have another talk with China, this time in Sweden, to discuss extending our agreements not to blow up each other's economy for another ninety days. That would be a real good one.

Everything appears fine and wonderful, except over in the bond market. Bonds remain in a downtrend, and bond traders are pretty sure we are just listening to a little Molly Hatchet, flirting with disaster and cruising down the road to apocalypse. There are some little cracks in the economy out there, and maybe there is reason for some concern. We will know a lot more at the end of the week when Friday brings the big jobs report. A bad report there might give a crack to the economy and lift bonds a little higher.

For now, the bond market is still viewing things as potentially very inflationary. That is their biggest overriding concern, along with a complete and total lack of confidence in the U.S. bond market and our financial institutions. Should Jerome Powell get fired, we will see an epic sell-off in bonds because people are just going to pull away from that market. We have a split opinion here on stocks and bonds, and we will see exactly how it plays out.

This will be a big week with lots of earnings. We have Apple, Amazon, Microsoft, and Meta later this week, plus Procter & Gamble tomorrow. A lot of earnings are coming in this week.

The big event this week is the Fed meeting. Will they or will they not? Will Jerome Powell throw in the towel and just lower rates already? I doubt it. I think most members of the Fed feel exactly as he does. Bowman and Christopher Waller probably want to see rate cuts now, and I could argue either side of this particular debate. I think we probably get nothing out of this.

I have heard lately the talk that the Fed is too tight, we need to lower rates, rates are too high. Historically, rates are really high. For me, following the Niederhoffian principle that if it can be tested, it must be tested, I sat down and challenged that conclusion with data. Are rates too high given the current rate of inflation and economic conditions?

I let the numbers tell the story using the FedFred database at St. Louis Fed. If it is financial, economic, and you need the information and data, it is probably in there. They have unbelievable data sets.