Bloomberg Surveillance: Economy, Geopolitics, and Fed Policy on June 24, 2025

US Dollar Outlook and Economic Pressures

• 💡 Innes McFee discusses cyclical pressures on the US dollar, including tariffs, oil prices, and investor reassessment of US assets.
• ⚠️ Despite depreciation, the US remains the largest market and central to the global trading system, making a seismic shift away from the dollar unlikely in the long term.
• 📈 Rising net supply of safe assets and macroeconomic volatility are pushing term premiums higher, suggesting higher yields even if short-term rates remain stable.

Fed Policy Amidst Stagflationary Shocks

• ⚖️ The Federal Reserve faces a dilemma with stagflationary shocks: rising inflation suggests rate hikes, while slowing growth suggests cuts.
• ⛽ Tariffs, immigration restrictions, and high oil prices are identified as key drivers of this stagflationary impulse, complicating monetary policy decisions.
• 📉 While the labor market shows some weakening, the consensus expects inflation to be higher by year-end, creating a risk of ingrained price increases if not managed carefully.
• 🗓️ The consensus points to a December interest rate cut as more likely than a July cut, with potential dissents from committee members not being a deal-breaker.

Congressional Economic Priorities and Monetary Policy

• 🏛️ Congressman French Hill emphasizes the Fed's focus on price stability and a safe banking system, moving away from ESG involvement.
• 📊 He believes the Fed should be data-driven in its decisions, despite political pressure, and that speculation about future Fed chairs is normal market noise.
• 🇺🇸 The Congressman expresses optimism about US economic growth, citing tax cuts, regulatory reductions, and strong GDP growth as historical drivers, and anticipates clarity on taxes and spending.

Geopolitical Tensions and Middle East Peace

• 💥 Retired Lieutenant General David Deptula states that Israel has achieved air superiority over Iran, leading Iran to consider negotiations.
• ⚔️ He suggests that continued application of force may be necessary until Iran agrees to meaningful negotiations, emphasizing the weakening of Iran's regime and capabilities.
• ⚛️ Deptula explains that Israel and the US have severely impacted Iran's nuclear capability by targeting human expertise and fissile material, though reconstitution remains a potential concern.
• 🌍 Actions taken by the US, particularly against Iran's nuclear facilities, are seen as restoring US credibility and acting as a deterrent to other nations and adversaries.
• 🕊️ Congressman Hill contrasts the current administration's approach with the previous one, advocating for **