Warsh Restores Some Fed Credibility: 3-Minutes MLIV

Mark Cudmore argues that Kevin Warsh's Jackson Hole speech repaired Fed credibility after July's FOMC damage. He says this supports stocks longer term despite higher yields, expects sticky inflation to force higher Treasury yields eventually, and dismisses yen intervention risk around 160. - Mark Cudmore says Warsh overdelivered and repaired credibility damaged by the July FOMC. - He views higher yields as reflecting restored Fed credibility and a hot economy, ultimately good for stocks. - Cudmore pushes back on the disinflation camp and expects sticky inflation to lead to higher yields eventually. - He says oil and other supply-side commodity pressures are not the Fed's main inflation concern. - September FOMC cut remains in play at roughly 60% market pricing. - He sees no dollar-yen intervention risk and calls the 160 level arbitrary.