No surprises from the Fed… the committee still expects higher prices are coming… how are the 10-year Treasury yield, the U.S. dollar, and oil prices impacting the market today?… are they “toxic” or “terrific? VIEW IN BROWSER This afternoon, the Federal Reserve held interest rates steady at the current target rate of 4.25% - 4.50%. Looking ahead, the Fed is still loosely penciling in two quarter-point rate cuts in 2025. For more details, let’s turn to the Fed’s updated Dot Plot. To make sure we’re all on the same page, the Dot Plot is a visual representation of where each FOMC member projects the fed funds target rate will be over the next few years. It’s part of the Summary of Economic Projections (SEP) that contains forecasts from FOMC members on key economic indicators like GDP growth, inflation, and unemployment. Here’s CNBC: The committee indicated, through its closely watched “dot plot,” that two cuts by the end of 2025 are still on the table. However, it lopped off one cut for both 2026 and 2027, putting the expected future rate cuts at four, or a full percentage point. As to the timing of the first of those two cuts, the CME Group’s FedWatch Tool is banking on September. As you can see below, the current probability of at least one quarter-point cut in September clocks in at almost 65%. 
Here are additional highlights from the SEP: - Fed officials expect core PCE inflation to jump to 3.1% by the end of 2025, higher than the 2.8% core rate forecast in March
- Inflation is expected to cool in 2026, with core PCE dropping to 2.4%
- Fed officials project the unemployment rate, at 4.2% in May, will climb to 4.5% by the end of the year
In his live press conference, Federal Reserve Chairman Jerome Powell continued to toe the party line… The TLDR (“too long, didn’t read”) synopsis of Powell’s press conference was: The economy is still largely in good shape and not screaming for a rate cut… though inflation hasn’t kicked in yet, we expect higher prices are coming… uncertainty remains elevated… we’re going to wait to adjust policy until the data point us one way or the other. Inflation – or rather the lack of interest rate cuts given recent cool inflation numbers – was the big question coming into today’s press conference. As legendary investor Louis Navellier pointed out, the Fed owed the public greater transparency over not cutting rates despite several months of good inflation data. When asked about this, Powell shifted the focus from backward- to forward-looking data: Everyone that I know is forecasting a meaningful increase in inflation in coming months from tariffs because someone has to pay for the tariffs. It will be someone…between the manufacturer, the exporter, the importer, the retailer, ultimately somebody putting it into a good of some kind or just the consumer buying it. All through that chain, people will be trying not to be the ones who can take up the cost but ultimately, the cost of the tariff has to be paid. And some of it will fall on the end consumer. Despite this answer, Powell was quick to hedge the Fed’s rate policy path looking ahead. When pressed by a reporter about the wide variance in rate forecasts from Fed members, Powell said that, “No one holds these rate paths with a great deal of conviction." He went on to say that as new data arrives, removing uncertainty, the Fed members are more likely to be in greater agreement on rate policy. Given Louis’ repeated commentary on the Fed, let’s get his quick take. From today’s Flash Alert in Growth Investor: The FOMC statement was pretty good, folks. They said uncertainty about the economic outlook has diminished but remains elevated. There are some hawks on the FOMC, but the bottom line is they're just uncertain. It's as simple as that. We’ll bring you more of Louis’ detailed analysis over the coming days. All told, there’s not much more to say – today’s FOMC meeting landed squarely in the “no surprises” category. The Fed stuck to its script and left rates unchanged as expected… markets remain positioned for a potential cut in September… and though forward-looking data projections changed some, there were no shockers. Bottom line: This was an in-between meeting: not a pivot, not a panic – just a “steady-as-she-goes until more data arrives” meeting. | Recommended Link | | | | There’s a Steve Jobs story that’s never been told. A secretive project he worked on in his final years that never saw the light of day. A vision so huge, so revolutionary, that it wasn’t just about the next hit product. But a plan to transform America itself. Details of its progress could become public as early as July 21st, and it could trigger an economic revolution that reshapes America’s future. Incredibly, Apple is NOT the buy. But this could be the most lucrative investment you ever make. |  | | Does the macro environment support a continued bull market? To help us answer that, let’s return to a term we coined back in the fall of 2023: the “Toxic Trifecta.” “Trifecta” references the three variables in our spotlight – the 10-year Treasury yield, the U.S. dollar, and oil prices. “Toxic” was an accurate description for them at the time (from the perspective of a bullish investor). But since then, we’ve enjoyed stretches of more favorable conditions when the better term would be “Terrific Trifecta” as their respective prices/levels supported market gains. So, where are we today? Let’s begin with the 10-year Treasury yield. Is the 10-year Treasury yield supporting a bull market today? Even though the Fed didn’t lower rates today, the prevailing opinion is that we’ll get a cut in September. So, that would be bullish for the 10-year Treasury yield, right? Well, let’s back up and fill in some holes so that we can properly analyze this. The 10-year Treasury yield is the single most important number in the global financial market. The higher it climbs, the more pressure it puts on stock prices and Main Street budgets. So, all else equal, we want lower treasury yields. Now, the default assumption is “lower rates from the Fed equals lower treasury yields.” And while this is generally true, it’s not an ironclad certainty. To illustrate, let’s rewind to last fall. Even though the Fed began cutting rates, the 10-year Treasury yield rose, bucking the traditional relationship. This happened because the Fed only controls the short-term federal funds rate. While it influences the 10-year Treasury yield, the real driver of that rate is the bond market, and last fall, they rebelled and pushed rates higher, not lower. This reflected the anxieties that bond market participants had around our government’s out-of-control debt and spending. These "Bond Vigilantes" dumped bonds, therein driving up yields, effectively punishing the government with higher borrowing costs. So, when the Fed decides to cut interest rates, it’s no guarantee that the bond market will go along for the ride. Today, the 10-year Treasury yield current trades at 4.37% as you’ll see on the chart below. This is the same level as fall 2023. Although the yield has bounced around during this period, the yield has stayed within a general range of 3.60% on the bottom and 4.75% on top. So, we’re closer to the top of this range. 
Now, the 10-year Treasury yield sitting at this somewhat elevated rate doesn’t mean stocks can’t or won’t climb. The explosive rally since the “Liberation Day” low in April is testament to that. However, we can say that the 10-year Treasury yield at 4.37% isn’t supportive of a roaring bull. A few days ago, in his Innovation Investor Daily Notes, our hypergrowth expert Luke Lango referred to the elevated 10-year yield as the “fly in the ointment.” While bullish about market conditions, he noted that the 10-year at this level isn’t “lighting the market on fire.” So, what are we to conclude? The 10-year Treasury yield is currently neutral for stocks – neither supporting additional gains nor pushing heavily against them. Therefore, the speculation centers on which direction this yield begins to break – up or down. Who will take control? Bulls excited about rate cuts in September? Or Bond Vigilantes rebelling against egregious government spending? We’ll see. For now, the 10-year Treasury yield is neutral for stocks…but has wildcard potential. Next, the flagging U.S. dollar is good for stocks…not so good for your budget In the same way that stock prices don’t respond well to surging Treasury yields, neither do they like a U.S. dollar that’s too strong. You see, when U.S. multinationals convert foreign revenues back into dollars, a strong dollar makes those earnings worth less. So even if business is steady overseas, the exchange rate can make it look like profits are shrinking. What many investors don’t realize is that roughly 40% of the S&P’s revenues are generated outside U.S. borders. For the tech sector, that exposure jumps to nearly 60%. So, the strength (or weakness) of the dollar can have a big impact on earnings – and by extension, stock prices…and your portfolio value. The good news for investors today is that the U.S. dollar is relatively weak – and getting weaker. As you can see below, the U.S. Dollar Index (which measures the value of the dollar relative to a basket of foreign currencies) has been falling all year. 
The greenback has lost 10% since late January. While this isn’t a collapse, it’s a significant pullback driven by trade deficits, rising fiscal concerns, and even waning confidence in the dollar as the world’s reserve currency. On Main Street, a weak dollar can strain family budgets by making imported goods – like electronics, clothes, and even some groceries – more expensive. It can also drive up the cost of travel abroad and contribute to broader inflation pressures at home. But from a stock perspective, a weaker dollar is generally supportive of higher prices due to the conversion/earnings tailwind we highlighted a moment ago. From here, we’ll be watching to see if the U.S. Dollar Index rallies and bounces higher into its recent trading range, or if it breaks decisively below 97, which would signal a more significant move with wider ripple effects that we’ll profile in a different Digest. For now, our bottom line is that the weaker U.S. dollar is supportive of gains for stocks as we push deeper into the summer. Is oil about to surge on geopolitical conflict or return to slumbering? Obviously, high oil prices hurt drivers at the pump. But they also impact consumers in less obvious ways… Oil/gas is used in countless sectors as an ingredient in all sorts of consumer goods (to name a few: cameras, coffee makers, golf balls, lipstick, sunglasses…it’s an enormous list). So, oil/gas prices influence the stock market – and our portfolios – even if we don’t have a great deal of exposure to the oil patch. Oil prices have spent much of 2025 in a subdued range, weighed down by soft global demand and rising non-OPEC supply. Slower-than-expected growth in China and a steady ramp-up of U.S. shale output have helped keep a lid on prices, while concerns about a cooling manufacturing sector in Europe and Asia added to the bearish tone. For much of the year, oil struggled to break meaningfully above $75 per barrel. That changed abruptly with the recent escalation in the Israel-Iran conflict. Fears of a wider regional war disrupting supply routes through the Strait of Hormuz – through which about 20% of global oil flows – sparked a sharp rally. Looking ahead, oil’s path will largely hinge on whether tensions in the Middle East continue to escalate or begin to de-escalate As I write Wednesday, the WTI Crude (the U.S. benchmark) trades at nearly $75 – miles above $57, its most recent low from May. If the Israel/Iran conflict remains contained and supply remains uninterrupted, prices should drift back toward pre-conflict levels in the $60s. But if hostilities spread – or if Iranian production is directly affected – oil could punch through $100. Whatever happens in the immediate future, our medium-term outlook still points toward soft underlying demand. So, absent a supply shock, the recent surge in oil prices is likely short-lived. Now, in past Digests, we’ve made the case for higher oil prices as we look further out on the horizon. We stand by that, but those prices will rise based on wider supply/demand dynamics that will take longer to play out (12 months+). For now, barring a wider war in the Middle East, volatility is the name of the game, with an edge to lower prices. Score another one for bulls as we look toward the end of summer. Putting it all together, the Toxic Trifecta has lost much of its bite – for now The 10-year Treasury yield, while elevated, isn’t actively smothering the rally… The U.S. dollar’s weakness is helping multinationals… And oil – despite its geopolitical spike – is still trending within a manageable range. Could any of these variables turn “toxic” again? Absolutely. But at this moment, none are flashing red. That gives this bull market some breathing room, and potentially, even more runway, as we look toward the fall. Bottom line: With the Trifecta more “Terrific” than “Toxic” today, we’re staying bullish and sticking with this rally. Have a good evening, Jeff Remsburg | 
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