July provided economic data that only left policy makers more divided on the direction of monetary policy. The US economy showed solid growth in the second quarter as the first estimate of Q2 GDP came in at 3.0%, inflation data was relatively benign, and retail sales showed gains. Yet, the labor market showed signs of slowing amid major downward revisions to recent payrolls reports, while concerns over the inflation impact from tariffs resurfaced following the latest Trump Administration trade policy announcement. Our view at Chandler remains unchanged as we continue to expect normalization of monetary policy consistent with data-driven rate cuts and a steepening yield.
