The Dollar Soars As Fed Holds Rates Steady

By Michael J. Kramer of Mott Capital Management

Wednesday, July 30, 2025 6:31 PM EDT

Stocks declined after the Fed held rates steady, with Jay Powell signaling during the press conference that he’s comfortable waiting for additional data before considering any cuts. The market is now pricing in only one full rate cut in 2025, as December Fed Funds futures broke out and climbed above 4%.

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The dollar index also surged today, breaking through resistance at 99 following stronger-than-expected ADP and GDP reports. It now appears poised to move toward 101.

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In other news today, META reported better-than-expected revenue and provided stronger-than-anticipated revenue guidance. However, the company also noted that both capex and expenses would be higher than previously indicated. It seems that as long as companies continue delivering above-consensus revenue growth, rising expenses simply don’t matter—a bit surprising, given that wasn’t the market’s reaction when Alphabet reported similar news. The earnings call will likely offer more clarity.

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Yesterday marked a significant Treasury settlement date, and tomorrow will be another. Consequently, the Treasury General Account (TGA) rose by roughly $60 billion, reaching nearly $420 billion. Should the dollar continue strengthening and the TGA keep climbing—as expected—the combined effect will lead to a reduction in overall liquidity.

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Copper today slumped by 17% after President Trump imposed a 50% tariff on Copper, but made an exemption for refined materials from the new tariff. It is a significant move in copper, as the market was obviously caught off guard by today’s news. I can’t imagine this will good news for any of the copper producers.

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As of today, we’ve yet to see any meaningful decline in 2-year CPI swap pricing. It will be particularly interesting to monitor how a full trading session at significantly lower copper prices impacts the inflation outlook.

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More By This Author:

Market Stalls Amid Conflicting Signals
Overbought Market Meets Rising Dollar And Tightening Liquidity
Complacent Markets Face An Avalanche Of News

This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. Mr. Kramer is not affiliated with this company and does not serve on the board of any related company that issued this stock. All opinions and analyses presented by Michael Kramer in this analysis or market report are solely Michael Kramer’s views. Readers should not treat any opinion, viewpoint, or prediction expressed by Michael Kramer as a specific solicitation or recommendation to buy or sell a particular security or follow a particular strategy. Michael Kramer’s analyses are based upon information and independent research that he considers reliable, but neither Michael Kramer nor Mott Capital Management guarantees its completeness or accuracy, and it should not be relied upon as such. Michael Kramer is not under any obligation to update or correct any information presented in his analyses. Mr. Kramer’s statements, guidance, and opinions are subject to change without notice. Past performance is not indicative of future results. Neither Michael Kramer nor Mott Capital Management guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment commentary presented in this analysis. Strategies or investments discussed may fluctuate in price or value. Investments or strategies mentioned in this analysis may not be suitable for you. This material does not consider your particular investment objectives, financial situation, or needs and is not intended as a recommendation appropriate for you. You must make an independent decision regarding investments or strategies in this analysis. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Before acting on information in this analysis, you should consider whether it is suitable for your circumstances and strongly consider seeking advice from your own financial or investment adviser to determine the suitability of any investment.

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