Trump would scream if this happens.
Target Rate Probabilities for September 16 FOMC Meeting
- 3.25-3.50 Quarter-Point Rate Cut: 0.0 Percent
- 3.50-3.75 No Change: 36.9 Percent
- 3.75-400 Quarter-Point Rate Hike: 48.5 Percent
- 4.00-425 Two Quarter-Point Rates Hikes: 14.5 Percent
Two rates hikes would imply a hike at the July 29 FOMC meeting, then a second one in September.
In isolation, the odds of a July hike are 31.5 percent.
October is curious.
Target Rate Probabilities for October 28 FOMC Meeting
- 3.25-3.50 Quarter-Point Rate Cut: 0.0 Percent
- 3.50-3.75 No Change: 29.6 Percent
- 3.75-400 Quarter-Point Rate Hike: 46.2 Percent
- 4.00-425 Two Quarter-Point Rates Hikes: 21.3 Percent
- 4.25-450 Three Quarter-Point Rates Hikes: 2.9 Percent
Wow.
That’s a net 70.4 percent chance of at least one hike before the election.
Conventional Wisdom
Conventional wisdom is the Fed does not hike close to elections.
A rate hike in September would go against conventional wisdom. A second or third hike on October 28 would be a real stunner.
Nonetheless, the combined odds are 70.4 percent chance of at least one hike by October, with a reasonable chance of two hikes.
Trump’s Expectation
Trump’s expectation is for Fed Chair Kevin Warsh to deliver rate cuts.
The stage is set for fireworks.
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My guess is something’s to break before that and we get rate cuts and QE instead.
They should do a full 1 percent!
Warsh will do what his bosses at the American Bankers Association, the stockholders at the 12 districts of the Federal Reserve, particularly TBTF banksters, and of course my personal favorites of lenders of private credit and owners of real estate via the stock markets BlackRock,Vanguard, State Street, tell him what to do.
The Donald has no more say. His leverage is gone. Jawboning, ad hominem, epithets, and idle threats are all he has left.
the accuracy 💪
Trump lost street cred on Day 2 of the Iran War
I love your final comment “The stage is set for fireworks.” Indeed.
In the wake of this week’s SCOTUS ruling upholding the “for cause” firing requirement for Fed governors, I’ll bet Trump’s investigators are already scouring the lives and records of Fed members for “cause” to menace or fire (or even prosecute) them.
Supreme Court slams down Trumps EX on birthright citizenship. Whamo!
https://apnews.com/article/supreme-court-birthright-citizenship-trump-immigration-c73cf0c70bb550ebf0a55fafddbd935c
Agree Mish according to “Blue Horseshoe” we get a cut in September, see Peter Tcshir’s note from Academy Securities from last weekend.
No problem buying gold on sale in the meanwhile…
I like your logic. On the strength of it, I just bought a bit. I also recently bought a bit of BTC, though Trump’s Iran deal (if it holds up, ha ha) takes some steam out of the global sanctions-busting use-case for that.
GLTA
Raise the rates! How much more evidence for serious inflation does anyone need?!
There is only one problem: this alternate universe we occupy has transitioned from evidence-based to Bizarro World reality TV logic.
Bond vigilantes were as bad as the Fed for allowing inflation to remain above 2% for 5 years. Bond vigilantes don’t have to adhere to conventional wisdom regarding raising interest rates before an election.
Yes been wondering where the band vigilantes had got too over the last 3/5 years.
Thank goodness there was a mention of Trump in this story. I was becoming concerned.
Well, the President of the United States appointed Warsh, and has been demanding significant rate cuts regardless of increasing inflation. Obviously, he is hoping to put significant pressure on Warsh which is likely the only drag on the FRB doing the right thing and increasing rates higher, faster. Certainly that political pressure plays to some extent and therefore should be discussed in any context of rate changes. Obviously if the President stopped commenting, he wouldn’t be worthy of inclusion in the post.
The art of riverboat gambling with other people’s money, credit and credit ratings:
DJT:
“I love the inflation”
Re his 6 bankruptcies: “I used the laws of this country to my benefit.”
Trump promised to eliminate the national debt in 8 years while campaigning in 2016, calling himself ‘the king of debt‘ at the time.
So, I’m sure this will all go splendidly.
I doubt it, the Fed rarely raises around elections. But after the election, i bet they do
Political pressure is rising, no? Can Trump’s investigators find “cause for removal” to harangue Fed governors with, pending that time? Can that Fed pattern or policy be reversed? This is the era of norm-busting, anywhere the federal executive branch reckons it can reach.
According to chatGPT, since 2004, the FED has not increased interest rates in the 6 month window prior to an election. Prior to 2004, they did so 6 times. See:
https://chatgpt.com/s/t_6a4420a4dfcc81919c37ed4966ff20e8
Liquidity Crisis Anyone . . .