Sign up for our daily briefing

Make your busy days simpler with Axios AM/PM. Catch up on what's new and why it matters in just 5 minutes.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Catch up on the day's biggest business stories

Subscribe to Axios Closer for insights into the day’s business news and trends and why they matter

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Stay on top of the latest market trends

Subscribe to Axios Markets for the latest market trends and economic insights. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Sports news worthy of your time

Binge on the stats and stories that drive the sports world with Axios Sports. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Tech news worthy of your time

Get our smart take on technology from the Valley and D.C. with Axios Login. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Get the inside stories

Get an insider's guide to the new White House with Axios Sneak Peek. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Axios on your phone

Get breaking news and scoops on the go with the Axios app.

Download for free.

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Denver news?

Get a daily digest of the most important stories affecting your hometown with Axios Denver

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Des Moines news?

Get a daily digest of the most important stories affecting your hometown with Axios Des Moines

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Twin Cities news?

Get a daily digest of the most important stories affecting your hometown with Axios Twin Cities

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Tampa Bay news?

Get a daily digest of the most important stories affecting your hometown with Axios Tampa Bay

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Charlotte news?

Get a daily digest of the most important stories affecting your hometown with Axios Charlotte

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Sign up for Axios NW Arkansas

Stay up-to-date on the most important and interesting stories affecting NW Arkansas, authored by local reporters

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Illustration: Sarah Grillo/Axios

The Fed looks to be laying the groundwork to lower U.S. interest rates this year, just as they did in April 2019 before cutting rates in July, September and October.

Why it matters: A Fed rate cut makes taking on debt more attractive for U.S. consumers and businesses, helping to juice the economy, but also puts the central bank in a weaker position to fight off a potential recession.

What's happening: In the minutes of its latest policy meeting, the Fed highlighted its desire for higher inflation, Bob Miller, BlackRock’s head of Americas fundamental fixed income, points out in a note. "The FOMC changed its statement at the January meeting to make that fact clear, and we see that sentiment confirmed in [Wednesday’s] meeting minutes."

  • San Francisco Fed president Mary Daly asserted in a speech last week that “the new economic environment requires that monetary policymakers push inflation up to target.”

Further, "If you look at the uncertainty about concerns surrounding coronavirus and the fact that they added the phrase 'for a time' to describe how long current policy will remain appropriate, those read to me as a signal that a rate cut may be coming," Thomas Simons, money market economist at Jefferies, tells Axios.

What it means: The Fed is refocusing attention away from solid U.S. economic data to fears about coronavirus and underwhelming inflation, much as they did with the U.S.-China trade war and global growth concerns last year.

By the numbers: Following the release of the minutes Wednesday, Fed fund futures prices showed traders saw a 93% chance of at least one rate cut by year-end and a 65% likelihood of two, according to CME Group's FedWatch tool.

  • That's up from an 84% likelihood of a cut the previous day and 60% one month ago.

Yes, but: Gennadiy Goldberg, senior U.S. rates strategist at TD Securities, argues the Fed is simply establishing its new view on inflation. He says assuming a rate cut is coming is a "misreading of the minutes."

Between the lines: Marvin Loh, senior global macro strategist at State Street, also points to the now-inverted U.S. Treasury yield curve, where 3-month Treasury bills hold higher yields (1.58%) than 10-year notes (1.56%).

  • "There are a number of things lining up to bring them back to the rate-cut table," Loh tells Axios.
  • He's expecting a rate cut by this summer.
Expand chart
Data: FactSet; Chart: Axios Visuals

The Fed has another reason to consider cutting interest rates — the strengthening U.S. dollar.

The big picture: The dollar rose to its highest level in almost three years against a basket of major global currencies on Wednesday.

  • In February, the dollar index has gained a little more than 2%, hitting its highest since April 2017.
  • It has strengthened against both currencies that typically appreciate when risk assets like stocks rise and against those that typically see buying when risk appetite falls.

When the dollar was last near this level, it was a major concern for U.S. multinational companies, highlighted as a primary factor hurting overseas returns.

  • It was also seized upon by President Trump as a reason to criticize the Fed's policy decisions.

What we're hearing: "With the coronavirus, a new tough situation presents itself that could lead to Fed intervention and thus affect the buck in a negative way," Juan Perez, senior FX trader and strategist at Tempus, tells Axios.

  • "But the ongoing contractions elsewhere along with the disease crisis are keeping the resilience of the dollar intact."

Interestingly, there has also been a 70% correlation between Trump's popularity and the U.S. dollar since his election, according to calculations from TD Securities.

Go deeper: Federal Reserve leaves interest rates on hold

Go deeper

Updated 59 mins ago - Sports

Swimmer Chase Kalisz first American to win Olympics gold medal

Chase Kalisz of Team United States celebrates after winning the Men's 400m Individual Medley Final on day two of the Tokyo 2020 Olympic Games at Tokyo Aquatics Centre in Tokyo, Japan. Photo: Al Bello/Getty Images

Swimmer Chase Kalisz has become the first Team United States Olympian to win gold at the Tokyo Games.

The big picture: The Rio 2016 silver medalist's winning time in the men's 400 meters Individual Medley Final was 4 minutes 9.42 seconds. His teammate Jay Litherland took silver, .86 seconds behind him.

California's largest wildfire razes homes as 88 huge blazes burn in U.S.

Firefighters on the scene as dozens of homes burn during the Dixie Fire in the Indian Falls neighborhood of unincorporated Plumas County, California, on July 24. Photo: Josh Edelson/AFP via Getty Images

Flames from California's biggest wildfire were engulfing homes in the state's north overnight — one of 88 large blazes raging in the U.S.

Driving the news: The Dixie Fire, which erupted July 14 near the origin of the deadly 2018 Camp Fire in Butte County, was tearing through the community of Indian Falls in the neighboring Plumas County, per AP.

Golfer Bryson DeChambeau will miss Olympics after testing positive for COVID

Bryson DeChambeau of the United States on the 18th tee during Day Two of the 149th Open at Royal St George’s Golf Club on July 16 in Sandwich, England. Photo: Andrew Redington/Getty Images

Bryson DeChambeau has tested positive for COVID-19 and will miss the Tokyo Olympic Games, USA Golf announced late Saturday.

What he's saying: "I am deeply disappointed not to be able to compete in the Olympics for Team USA," DeChambeau said in a statement.