Big change in just one day. Yesterday odds were 50/50 of a rate cut in December.
Today, odds of a rate cut are only 33%.
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Very odd, given the Treasury Sec has just been made accountable for rate cuts.
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SB,
That is the crazy uncle you do not invite to Thanksgiving talk.
But more ominously he wants the FED to take orders from the Treasury Secretary. It is offensive.
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MaybeâŚI dunno. I think TFG broke my Offense-O-Meter.
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That is like claiming we are not in manure because there is so much of it.
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This is a truly idiotic statement. The Treasury and the Federal Reserve are completely different organization. Treasury has zero impact on the fed funds rate. If Trump doesnât understand this ⌠well, itâs scary.
Wendy
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Agreed. But letâs look on the bright side, at least Bessent isnât being accused of sedition and threatened with executionâŚ
If Bessent is fired, it will be because heâs argued for keeping Powell. If Bessent goes, Powell will follow soon thereafter. Then comes Constitutional Crisis XIV!
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We may let pols off too easily by dismissing them as âIdioticâ where in reality we might be looking at something more sinister, like power grabs. It has been tried before -
LBJ is famously known for physically intimidating Federal Reserve Chair William McChesney Martin.
⢠In 1965, after Martin raised interest rates, Johnson reportedly summoned him to his Texas ranch.
⢠According to multiple historical accounts, LBJ shoved Martin against a wall and yelled that raising rates would hurt the country and his Great Society programs.
⢠LBJ wanted loose monetary policy to help fund the Vietnam War and domestic initiatives.
..but not successfully. And it was 60 years ago. Various presidents would certainly like control of the Fed, thatâs for sure!
Pete
Our spastic governance is making investors itchy, itchy, itchy. Itchiness has macro consequences.
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Who is he trying to incentivize to do what with that threat?
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For the Fed, it is more that the âdual mandatesâ are pushing in different directions. At any rate, here is the reason for the probability change on Friday:
Odds for another interest rate cut jumped Friday after New York Fed president John Williams signaled he could support a cut when the central bank meets in DecemberâŚWilliamsâ comments carry added weight because he is the vice chairman of the Federal Open Market Committee and one of whatâs unofficially known as the âtroika,â the group of leaders at the Fed, including Fed Chair Jerome Powell and vice chair Philip JeffersonâŚ
Also on Friday, Fed governor Stephen Miran said that if he were the marginal vote on whether to cut rates, he would vote for a 25 basis point rate cut instead of the 50 basis point cut he favors.
DB2
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