Odds now are over 87 percent for a Fed hike. What will Trump do?
Fed Watchers
Five of six indefinite hold calls switched to hike after the CPI report.
Bianco on Leaks
There will not be a leak.
Will Trump Summon Warsh to the White House?
- Yes
- No, Just Media Pressure
- Nothing
Expect a hike, summons or not. My take is The August CPI Report Seals a September Fed Interest Rate Hike
My position didn’t change as explained on August 31 in Political Realities May Force the Fed to Hike in September
It will be a stretch for the Fed to pause for many reasons, not just the CPI.
I think they are going to skip and hold until Dec and then do 50 (and be further behind the curve). Trump lame duck (post Nov) easier for Fed than raging orange turd for the next two months (and Oct meeting which he’ll be hounding them to cut 100bp)
Well, Trump is only interested in the stock markets. Warsh knows that as long as the hike is only 25 bp, the markets are perfectly fine with it. He’s got the market’s blessing to make that meaningless rate hike. So he will.
The 3 month bill is at 4%, who needs the Fed anyway? The market seems on it’s way to inverting the yield curve.
Anything said in public, even on stage at the wh theater “filmed before live [CNN and Fox] studio audiences”, is performative.
Every time [Fonzi] comes in and politely reads someone the riot act, we hear “oooh! and “ohhhh!”. It’s scripted and ad libbed. Like the Marx brothers, these people are so well-rehearsed they rely less on a script and more on some talking points.
Certainly, they’ll have a discussion. +0.25% is really pretty meaningless and allows Fed to seem to be ringing their hands with fraught. Meanwhile Exec gets to do silly things in the ME. It’s a win win.
The Warsh Fed will raise rates, Trump will kavetch. No President likes a headwind even if much of it was of his own making. It’s sorta nice not knowing nor having Blue Horseshoe telling his friends (and ultimately the common man’s enemy) of the intended move in advance.
Remember that Warsh was the first Fed chief in more than 40 years NOT to vote to raise interest rates at his first FOMC meeting.
This notion that he’s a crypto-hawk needs to die.
AFAIK, the Federal Reserve has never raised rates during a war – even an undeclared one.
I don’t see how the Fed can raise rates.
Raising the Fed rate will cause the USD/JPY exchange rate to surge once again. The BOJ has likely already had to begun resorting to dump US Treasuries because long-term US Treasury holdings constitute most of the BOJ’s remaining dollar-based assets.
You can read about that here:
https://www.japantimes.co.jp/business/2026/09/07/markets/japan-treasuries-sell-for-yen/
Another episode of this could cause another spike in long-term US Treasury yields which could precipitate a catastrophic global deleveraging from the dollar.
So what’s actually going to happen?
a) No rate increase in Sept. The Fed may toughen its language and it may even suggest it’s ability to counter a supply shock is limited
b) The BOS, the Fed, and US Treasury consummate a backroom deal whereby the BOJ assumes an offtake agreement where they scoop up US Treasuries that the Bong Vigilantes offload when the rate hike doesn’t happen
c) The FOMC starts making noise about meeting less often.
But please understand this one thing…
Japan is hugely-dependent on long-term LNG contracts (with Qatar, etc.) that almost certainly have currency collars. If a Yen decline breaches these collars and the supplier declares force majeure – Japan starves to death in the dark. Losing these contracts is an existential problem.
The exception would be if the BOJ actually follows through with this:
https://www.japantimes.co.jp/business/2026/09/12/economy/boj-interest-rate/
If Warsh indeed gives in to monetary realities, he will have to face the cameras and tell Trump on TV, likely in a very convoluted way, that Trump is a complete moron when it comes to opinions on monetary policy. I still think that Warsh doesn’t have the requisite spine to do that.
But there is one thing that would be even worse for Warsh: he gets outvoted in the FOMC. That would be worse than taking a Truth Social beating.
Of coarse. Got to get the skinny so he can profit off the deal.
It will be interesting. I dont think he will make a big deal of it. Makes him look bad. His boy not towing the line on a problem hes caused.
Bad optics even for this president. Warsh is smarter than that.
Trump knows that logically rates have to go up so a meeting with Warsh goes no where. So his best bet is to whine and snivel on “lies antisocial” about how smart he is and how stupid the fed is and if they would just listen to him utopia is two weeks away.
I can’t believe 75 BPS though.
At 75 BPS that might convince Trump to back track on Iran.
Trump now owns higher inflation/the affordability question. Tariffs, Wars, low interest rates and lower taxes all mean inflation and these are his policies. Does he really think these policies would enable him to keep his promises?
I don’t think he cares about promises he only cares about remaining in power.
>At 75 BPS that might convince Trump to back track on Iran.
Or bomb the US Federal Reserve building.
Don’t laugh.
Wouldn’t Trump need to bring in the whole committee to brow beat them into voting the way he wants? Just inviting Warsh won’t hack it.
He could put Warsh in a room with the Real Estate agents. Kushner and Wittkoff are master negotiators who could convince anyone of anything. /s
On the other side. This is the media message which is a mouthpiece for financial manipulation. The media wants demoncratics.
Both Warsh and Bessent are hedge fund managers not egg head think tank economists. They communicate all the time. If Warsh is summoned to White House it is just part of a show for the media. This is all pressure from the media to raise rates into an election.
What if Warsh invoked demand destruction and does not want to repeat the 2008 European mistake of raising rates. Traditional economists just look at rates and dont take in the effects that many economies are in trouble and selling their dollar piggy bank(treasuries) to fund oil purchases.
Europe negative GDP
China bailing out major banks and financial institutions.
Oil price increases are net positive since we are an oil exporter.
The media has been threating that the fed may lose credibility over long rates. They never had influence only short term. This plays on the bessent move. Bessent is buying heavily discounted long term debt for 75 cents of face value and replacing with face value treasuries at lower rates and making it easier to borrow treasuries against collateral; greasing liquidity. Bessent is oversuppling the market with bills.
The core CPI was as expected and did not increase. This is just hype. I will take the 13% odds against the media narrative.
You’ve shown time and time again that you are mentally handicapped so I think this comes as a shock to no one.
There are three ways to reason with people, facts, emotions and name calling. I see you have chosen the last.
What will trump do? Hopefully stroke out.
The list of things he would hopefully do fills many supercomputers by now. He has an absurdly improbable quality of not doing them, one weird disgusting misadventure after another. He is like a coin that lands on its edge, again and again. And the bad externalities fall away from him, onto others.
Kibuki Theater
Trump Lies Again: Says We’ve Taken In $21 Trillion From Tariffs
During an interview with Fox News host Laura Ingram, Trump claimed he probably didn’t need congressional approval to hand out $5,000 checks to Americans as a bribe and lied, saying he’d taken in $21 trillion from tariffs, which would pay for it.
$21 trillion is an awful, awful, awful lot of money.
If paying us each $5,000 would add up to $1.5 trillion, then getting $21 trillion would mean he took about 14 times that much in tariffs each from same number of payers. So $70,000 each from several hundreds of millions of payers. Right? Beyond absurd, but what else is new.
That was the cumulative amount of pentagon money unaccounted for, last time I read a few years ago.
Total annual revenue for the US government is somewhere around $5.25T. That includes everything: personal taxes, corporate taxes, tariffs, everything. $21T would be all government revenue for the next 4 years.
Is he that stupid or does he think everyone else is so stupid to believe that lie?
BTW the US will spend about $7.25T this year so about a $2T deficit in one year.
Any way you slice it, the US will need to borrow to pay for those $5,000 cheques. I can’t see even a GOP congress allowing that level of borrowing.
Taco doesn’t seem to be able to discern between a billion and a trillion
Inflation would then go vertical. Even DeSantis said something along those lines.
It is just so CHORAL, all of this nonsense about Hikes or not. Interest rates are a signal, not a mechanism.
I don’t see him getting summoned. I think Trump is too impotent now.
He will attack on social media. He can do that from the toilet
You see Trump picking this guy up and holding him against the wall, and explaining to him that he will not raise interest rates, as LBJ was said to have done to the head of the Fed in his day? I don’t think Trump is quite such a criminal type as LBJ, and the people around him aren’t as pathetic, either: they wouldn’t let Trump get away with it.
LBJ would rightfully slap this pedophilic excuse for a president silly. You keep his name out of that child molesting mouth of yours.
I suspect Trump is, underneath the buffoonery, a gangster like LBJ. Or more like Gotti, who loved the spotlight.
Warsh has to be dreading that closed door meeting, and the deployment of the diaperbomb.
If Trump thinks it will do the trick, then that’s what he’ll do.
Whether Trump does or does not summon Warsh is irrelevant. The bond market is, and has always been, in control of interest rates.
No, the currency markets are in control of…everything.
Appetite to hold a currency ultimately determines the yield requirement of bonds. It’s not the other way around. Never has been.
At a certain point raising interest rates won’t bail out the USD or the JPY.
What you said is so simple and obvious that I’m surprised Prechter and Elliott Wave International never mentioned it. They have always shown how central bank actions lag yield changes in the bond market.
Your statement makes sense from the standpoint a currency system can exist without a bond market, but a bond market cannot exist without a currency system because the loan is in a currency.
Nobody holds an asset unless it’s yield or underlying base value is in a currency that is useful to them.
Yes
I thought about this a little more. Trump might make a social media post about how it would be terrible if, after the FED raises rates someone did something violent to Warsh.
Even a deranged and self-centered, over confident taco has to see his position is becoming eroded by the day (with no one blame but himself). As a result, you can believe taco will place pressure on warsh not to raise interest rates.
I agree. Warsh will cave.
If so, it would be much more glaringly public than Nixon’s twist on Arthur Burns (giving a temporary election-linked time boost to the economy, but woefully inflationary), or even Trump’s prior twist on Jerome Powell circa 2018 (setting the stage for our bad shape going into the pandemic and the subsequent inflation).
But again, shame is the most absent commodity nowadays. Trump’s fans are so dumb, shame is a waste of time for him. They forget what he did or said five minutes ago.