Fed Chair Powell Cites Uncertainty, Holds Rates Steady as GDP Data Meets Expectations and 10-Year Yields Near 4.5%-5%

Federal Reserve Chair Jerome Powell has reiterated that uncertainty remains high due to ongoing trade negotiations, with many issues still unresolved since June. Despite active trade talks, clarity on outcomes has not been achieved, contributing to the Fed's decision to keep interest rates unchanged. Recent U.S. GDP and Personal Consumption Expenditures (PCE) data met expectations, but conflicting economic signals continue to challenge policymakers. The Fed is facing pressure to cut rates, yet broader structural factors such as rising debt levels, shrinking global savings, and shifting geopolitical dynamics are exerting upward pressure on interest rates. These forces are maintaining the natural rate of return, keeping 10-year Treasury yields near 4.5% to 5%, suggesting that the era of cheap money may be ending. Market participants are reassessing their outlooks in response to the Fed's cautious stance amid this complex economic environment.