Fed split on rate cuts

Doves circling, but no consensus just yet: Most Federal Reserve officials see interest rate cuts coming this year but remain divided on when and by how much, minutes (pdf) from the Fed’s 17-18 June meeting show. While “most participants assessed that some reduction […] would likely be appropriate,” others cautioned against moving too soon, citing a still-resilient economy and inflation that remains above target.

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The keyword is tariffs: The divide is mostly due to a lack of certainty around the impact of tariffs on inflation. “While a few participants noted that tariffs would lead to a one-time increase in prices and would not affect longer-term inflation expectations, most participants noted the risk that tariffs could have more persistent effects on inflation,” the minutes said. Some also said inflationary effects could be “more limited” if firms adapt or trade agreements are struck.

REMEMBER- The majority of Fed policymakers expect two or more rate cuts this year, after they held benchmark rates steady in June at 4.25-4.50% for the fourth consecutive meeting.

Views are diverging on the next meeting: Some policymakers floated a cut “as soon as the next meeting” at the end of the month, while others saw no need for reductions at all this year. On the question of how much, several said the current rate “may not be far” from neutral, implying limited room for easing. Others pointed to softening inflation and labor market cooling, warning of “difficult tradeoffs” if inflation proves sticky while employment weakens.

The data sends mixed signals…: June job growth surprised to the upside with 147k new payrolls and a drop in unemployment to 4.1%, CNBC reports. Still, consumers are pulling back, with May retail sales falling 0.9% and personal spending dipping 0.1%.

…and Trump applies pressure: President Donald Trump continues to publicly lash out at Fed Chair Jerome Powell, demanding deep cuts and even calling for his resignation. Powell has pushed back, stressing the Fed will base its decisions on data, not politics.

THE CLOSING BELL: TADAWUL-

The TASI remained unchanged on Thursday on turnover of SAR 4.9 bn. The index is down 6.3% YTD.

In the green: SHL (+9.9%), Cenomi Retail (+5.8%) and Sisco Holding (+4.2%).

In the red: Masar (-6.1%), Jabal Omar (-2.8%) and Jouf Cement (-2.7%).

THE CLOSING BELL: NOMU-

The NomuC rose 0.1% on Thursday on turnover of SAR 33.2 mn. The index is down 12.7% YTD.

In the green: Mayar (+22.0%), Anmat (+10.2%) and Future Care (+9.7%).

In the red: Almujtama Medical (-6.0%), Alrasheed (-5.5%) and Saudi Top (-4.8%).

CORPORATE ACTIONS-

Alwaha REIT Fund-manager Wasatah Capital plans to raise SAR 47.9 mn, which would place the fund’s total capital at SAR 210 mn and give it steam to finance the acquisition of the Al Jawhara Residential Building in Riyadh, according to its prospectus (pdf). The additional units will be offered at SAR 10 per unit from July 15 to July 28, with investors allowed to subscribe to a minimum of 50 units each.

ADVISORS: AlJazira Capital was tapped as the lead manager. Receiving agents include AlJazira Capital, BSF Capital, Al Rajhi Capital, SNB Capital, Riyad Capital, Albilad Capital, Alistithmar Capital, Derayah Financial, Alinma Capital, ANB Capital, Yaqeen Capital, Al Khabeer Capital, SAB Invest, Sahm Capital, GIB Capital, Musharaka Capital, EFG Hermes Saudi Arabia, and Awaed Capital.