FOMC keeps growth at solid pace

0.55 was the 10-year minus 2-year Treasury spread on the most recent available FRED observation for 2025-05-01 fred.stlouisfed.org when the May 7 FOMC statement kept activity at a "solid pace" despite swings in net exports federalreserve.gov. That left the text looking like a benign hold unless the Committee had downgraded growth or leaned harder into inflation risk.

0.55 was the 10-year minus 2-year Treasury spread on the most recent available FRED observation for 2025-05-01 fred.stlouisfed.org when the May 7 FOMC statement said recent activity "has continued to expand at a solid pace" even though "swings in net exports have affected the data" federalreserve.gov. As of that same 2025-05-01 FRED snapshot, the 10-year Treasury yield was 4.25 percent fred.stlouisfed.org and the 2-year Treasury yield was 3.7 percent fred.stlouisfed.org, so the statement landed into a curve that was already positively sloped rather than recessionary-flat. For traders, this read as a benign hold in the text: the hit-or-miss was the wording, not some surprise in the baseline. A dovish miss would have required a clear downgrade from "solid pace" on growth; a hawkish beat would have required a broader or sharper inflation-risk emphasis. Instead, the Committee added the net-exports caveat and otherwise stayed close to the January 29 activity language that growth had "continued to expand at a solid pace" federalreserve.gov. All else equal, one plausible interpretation is that the release kept the market in wait-and-see mode. What would have changed the read was a move away from "solid pace" or a materially tougher inflation signal.