There is now only an 11% chance of a cut in June and 43% in July.
Time for the Fed to Do What?
Powell Sinks to Trump’s Level?
Unfortunately, that’s paywalled. But Booth has been all over Powell for not cutting rates.
My position remains as follows.
Uncertainty
Fed Holds Interest Rates Steady at 4.25-4.5 Percent
Flashback May 7, 2025 Fed Holds Interest Rates Steady at 4.25-4.5 Percent in Unanimous Decision
No One Knows What Trump Will Do
No one know what Trump will do with tariffs, what Congress will do with the budget, or how the markets will react to whatever Trump and Congress do, so a decision to do nothing makes sense.
“The costs of waiting are low,” said Powell in the press conference.
We could easily see a significant bout of stagflation or a big deflationary crash. We could also see the first followed by the second.
I am not at all a Fed apologist, but assuming there is a Fed, hold was the right call.
Somehow “wait and see” is labeled as stooping to Trump’s level.
The irony is Trump is wildly all over the place while the Fed sure isn’t.
US and China Slash Tariffs for 90 Days with More Planned Talks
Today, I noted US and China Slash Tariffs for 90 Days with More Planned Talks
The stock market is giddy on a tariff reprieve, but what’s really changed?
Empty Shelves for Christmas Likely Avoided
One thing that’s changed is empty shelves for Christmas have been avoided.
Shipping costs that had plunged will now soar. And we will have approximately a 40 percent increase in the price of goods from China.
Fiscally nothing has changed. The budget rates to be an absolute disaster with even Republicans unwilling to cut much of anything.
The change in shipping costs, 40 percent tariffs on goods from China, and the deficit all add upward. pressure on inflation.
Bond Market Reaction
The bond market reacted appropriately today.
The 10-year treasury yield is now up 10 basis points on the day to 4.48 percent. And the 30-year long-bond is now up 8 basis points to 4.91 percent.
Ominous Looking 10-Year and 30-Year US Treasury Yield Charts
On May 3, I commented Ominous Looking 10-Year and 30-Year US Treasury Yield Charts
The technical patterns on long-dated treasuries suggest rising yields. What about fundamentals?
A bad CPI report tomorrow could easily push rates up higher.
Today, it makes perfect sense for Jerome Powell and the Fed to wait. Looking back, it made sense for the Fed to do nothing at the last meeting as well.
Powell is certainly not at Trump’s level here despite the fact we have dueling manipulators, Trump and the Fed.
As always, congress (via DOGE) focuses on spending that is inconsequential in the long term while running away from that which is – entitlements. I’d add defense too but bad past decisions by both DOD and congress have left a mess that is going to require spending to fix (ie, Navy).
Seems there is a claimed problem about not knowing what Trump will do.
Here is a suggestion watch a Cabinet meeting.
Bessent stated there are 75 countries with deals offered.
Pay attention Powell, Janet is no longer Secretary of Treasury. Powell should discuss with Bessent what is policy of White house since Powell and financial writers do not Know.
Hmm
a $400mil luxury airplane from Qatar–a “strategic ally” of China (and Iran)
of course it goes to his “library” after his term
Going around the ME to collect the rest of the booty this week
good timing on cooling the tariff game
The Qatar gift to trump is for allowing Russia and Iran to help Qatar (OPEC) to drop the price of oil and gas to a level where American producers go bankrupt.
The world is awash with oil and gas. U.S. producers are slashing Cap Ex like crazy in an attempt to preserve pricing and profits. Steel pipe has doubled in price thanks to the random tariffs and shortages caused by fear of those tariffs.
Drill baby drill my ass!
With trump alienating our European allies they are free to import cheap Russian energy.
All this caterwauling about tariffs, interest rates, deflation, depression, trade wars, taxes, markets, Congress, Trump, the Fed and on and on endlessly for clicks.
Absolutely nothing has changed in my world. Shelves seem full, especially COSTCO. We’re not missing any necessities or luxuries and we’re eating well. Investments are doing fine. My equity account was up 3.64% today. T-Bills are still paying interest the last time I checked.
So, while everyone is preaching doom and gloom, I see no reason not to make money. But, if you guys happen to be right one of these days, I’ll go short.
I said the same thing when Biden was president except the stock market was higher, T-bills were paying more interest, the unemployment rate was lower and we didn’t have airplanes falling out of the sky nor aircraft carriers nor airports shutting down.
LOL – This is not a difficult thing to see if one were to look beyond their disgust with DJT but the last 3 rate cuts, which put the T bills rate at its current rate, unchanged during Trump’s term, were September 2024 (Biden – 50bps), November (Biden – 25bps), December (Biden – 25 bps). Sure the peak rates were higher but they are no different today than when Trump took office. And those cuts at the time were not expected, close to the election and,in hindsight, questionable. Accuracy grade: fail.
The market leaped 2.5% when DJT was elected, continued rising after his election but, to make the comparison fair, ended at 5996.66 on Jan 17. Today it ended at 5844.19, off 2.5% so far since taking office. Accuracy grade: pass.
Unemployment is 4.2% (perhaps the increase was the desired cuts in government, eh?). Matching November’s level. And above the Feb 4.1% which would be the last Biden-impacted number. Accuracy grade: meh.
Airplanes falling from sky…yep, surely Trump’s fault so then train derailments were Biden’s fault? Okay. Now you’re reaching.
Relatively speaking Irondoor is right–things are not all that changed other than a lot more activity and attempts to get something done in the meanwhile. We can argue whether the attempt and end goals are in line with what you expect but please don’t imply that we see this massive difference in the stock market, bond market or unemployment rates because that just doesn’t ring true despite the chaos and upheaval.
Guessing you still own bonds, still are massively invested, take a flight if you want, and are unconcerned that our US Navy or Air Force can handle flights if called upon—the rest seems faux outrage.
I suspect we’ll continue to see deficits on the backs of those famous turtles of yours, a feckless congress, a gentrified monied class supporting more of the same and Americans generally expressing disgust in social media but unwilling to have any net change.
You’re a liar and can easily be proven. here is a chart of 1 month t-bills.
https://ycharts.com/indicators/1_month_treasury_rate
click on 3 yr chart.
From January 2023 thru January 2025, the rates were higher than they are now. I know because I was rolling hundreds of thousands in t-bills every month.
You cherry picked the S&P data not from Biden’s peak but when he left office then you pick today’s sucker’s rally data instead of Trump’s low point. Why don’t you tell us the differential from those two points I wonder?
But it doesn’t matter anyway, Trump’s gross incompetence will lead to a recession and market declines anyway and we have 1349 days to go.
Nice try Bill but you’re operating in 5 dimensions of delusion.
I’m a glutton for doom and gloom, been a consumer of MISH FOR POTUS since may 2009…
Damn charts are against us.
Always low on the left high on the right!
Sonsabeeahtches are trying to get me to capitulate.
If gw couldn’t bring on the end of human civilization then Trump certainly can not.
Sleep well dick chanee
A key belief of MAGA seems to be that the “oligarchs” will see to their interests. They are not really populist at all.
And no planes falling off aircraft carriers? 🙂
Still am waiting for all those empty shelves to show up under Trump.
Biden however with the destruction of chickens and egg prices skyrocketing that got a Pass from the economists over at fed land.
Lol! Why do you think he just caved to China? Because the retailers told him the shelves would start to empty in another 5-7 weeks.
When it comes down to it, Americans aren’t willing to take any pain. China knows this and waited us out till Trump caved.
Discussing with the missus tonight how Trump plans are a series of crashes and booms.
Human nature is bent to only remember the booms.
Trump is on a roll!.
Booms and busts every three months
What a show!
A wise papa once or thrice wrote 🤔
It was China that quietly approached Trump for a tariff meeting. China blinked, as they were facing economic collapse from factory layoffs.
Just curious do you examine information from some other source then MSNBC or Mish?
China economy is in the crapper. Xi needs a deal or CCP is going to have a revolt by the peasantry on their hands..
The GOP majority in the House is too slim to allow them to do much of anything. If the Dems take the House in 2026 it’ll stay the same – only with a few impeachment attempts. Plus Trump wants MORE money for “defense” and he’s “selling” weapons to a country that has no money and no prospects of having any money in my lifetime.
I just saw some people on an overpass holding Ukrainian flags. I gave them then the finger. Both hands.
I agree 100%! Stagflation followed by a Deflationary Depression. The cure for high interest rates is a deflationary depression. 1920’s to 1930’s – 2.0
Happy days are here again.
A couple weeks after reporting lower sales, McDonald’s announced it is hiring “up to” 375,000 workers. Isn’t that how many typically quit in a given year because the job is crappy and low paying?
My college kid worked for Chipotle one summer. The pay was reasonable and dental and vision benefits that she used kicked in 30 days after her start date. Good experience!
Rates will have to go up to save the US dollar.
“For you, the … people, it is simply a question of following me without mental reservation along the path of honor and national interest.” — Marshal Philippe Pétain, after French surrender, 1941. But, weren’t we on a Long March to change the world? I mean, last week anyway? No more dolls and pencils and “junk”?
Deflect and distract, shift the goal posts around, that’ll work!
Some long term rate daters are starting to feel trapped and suffocated in their relationships. They will have to soldier on.
There is a perfect storm forming.
The DOGE gov layoffs will take effect around September.Trump’s 90 day push back on tariffs will hit around mid to late August unless he capitulates again but full effect by September.No Fed cuts means higher borrowing costs for all those loans that need to be refinanced in CRE. There is about $1 trillion in loans this year along with all the other debt around September.S&P multiples have peaked and it’s downhill from here into Q3/Q4.Trump’s budget isn’t going to happen till around August or Sept at earliest given the current circumstances.It’s all coming together for the perfect market storm. I hope people took advantage of this suckers rally to re-evaluate positions and adjust accordingly.
Trump & GOP will own it 100%
It’s Chihuahua negotiation… bark loudly and act fierce, but retreat when counter attacked.
He probably had a word with his Qatari friend about it all, saw the light, and changed course. Now he’s gonna be rockin’ around in his brand new state of the art jumbo jet while the rabble grub for scraps far, far below.
He should paint the thing black and dress his secret service like stormtroopers…. have the imperial march play while he’s coming down the stairs.
Think bigger than the US. GLOBALLY there is a ton of 5 year debt maturing. Those with poor credit were allowed to get loans at historically low interest rates. Will they be able to refinance? Will enough default and cause a global crash?
And on this point you are spot on..September looks like a nexus point. We know Congress ain’t getting nothin done until the deadline and it’s not like anything changed today. No one really wants anything changed except those that don’t own assets and they don’t have enough influence to do anything except vote every 4 years only to watch Net-No-Change yet again. Gosh we need a good comeuppance.
The economy is slowing, and inflation is rising. The FED has LOST control.
Bank Credit, All Commercial Banks (TOTBKCR) | FRED | St. Louis Fed
The Lowest Comfortable Level of Reserves (“LCLoR”) is a joke.
Dr. Daniel L. Thornton, May 12, 2022:
“However, on March 26, 2020, the Board of Governors reduced the reserve requirement on checkable deposits to zero. This action ended the Fed’s ability to control M1.”
Don’t put it past the government to distort the inflation figures as it has done for a long time.
Trump would never distort the numbers. Ever.
It’s probably even worse: they actually, really trust their bogus numbers.
This wasn’t much of a problem when inflation was relatively mild, but since inflation spiked especially in housing, the fakery became obvious, but they double down on fake number to the point of criminal negligence.
“There is now only an 11% chance of a cut”
Wrong. There’s a zero percentage chance as long as Powel is chair.
And it’s not a walk back. It’s called a start to negotiations.
Get that TDS under control
I was surprised, your not leading with an insult. Then I saw your last line. At least one thing around here is strictly predictable.
Predictions are very difficult, especially about the future.
It’s a form, like a haiku. I don’t know all the rules, but it’s short, and it ends like an insult.
You ate too many machine gun bullets for breakfast today, just relax. Maybe you did not know this but that 11% is an assigned probability based on market participant sentiments. It’s not a percentage chance that Mish himself set.
And it’s a walk back, They both caved on the tariff rates. What’s going on here is your Woke Right self is feeling victimized again.
It’s not a walk back indeed – it’s a flop. The Pushover in Chief is being bested again. But all will be well once the 200 trade deals (with 195 countries that currently exist) are signed this month.
There is a 100% chance that Trump/GOP will own it. 100%
Perhaps Trump should not have appointed Powell.
And the meeting in Switzerland was a win, win, win for China.
They got all three things they said they wanted:
1. Tariffs dramatically lowered.
2. A point man to negotiate with, now and in the future. (Bessent)
3. Respect at the table. (from Bessent)
If Trump had all the leverage, as you keep saying, why did he cave and give China everything they wanted?
Dooood…
It’s just as simple as the Ptb crash the worldwide economy because.
The debt every where.
.the war every where..
The tariffs all around and every where..
The commercial real estate debacle every where.
The mass lay offs
Every where.
Trump is a puppet on a string.
Admittedly the most mind boggling entertaining.
A puppet nevertheless.
There will be a crash again, like 2008.
All those players back then could have simply agreed to have each other’s backs..
However, they, tptb, knew a great payday via public money was forthcoming……
Too big to fail.
Sequel, re run, whatever.
You and I can only marvel at the power to have corporations injected with our tax dollars for the good of the country..
GM, er, GOVERNMENT MOTOR stock bought and held by obomber was sold at a profit, did you get a cut?
No, you did not