Fed officials are now hinting at a rate cut this year, citing concerns over trade and the inverted yield curve. St. Louis Fed President Bullard: “A downward policy rate adjustment may be warranted soon”. Vice Chair Clarida: “If… growth is lower than we expect… we’re going to put in place appropriate policy.” Chairman Powell: “we will act as appropriate to sustain the expansion”. Financial markets now imply a 90% chance of a cut in September and an 80% chance of another in December, and the yield curve has been inverted for nine straight days. Recent data supports their concerns. Real personal consumption fell for the third time in five months, pushing the y/y rate down from +3.1% to +2.7%. Real personal income is running at a tepid +2.2% y/y. The ISM manufacturing index fell from 52.8 to 52.1 points, the slowest in almost three years. Corporate profits after tax fell for the second consecutive quarter in Q1, shoving the y/y rate down from +11.1% to only +1.6%.