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Feb 18
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WATCH
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Unknown Speaker
Financial Commentator/Analyst
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"If you take a look at the thirty year mortgage rate right now, it's sitting at about 6.1%... With rate cuts, it does take a little bit longer to trickle into the mortgage rate space." The housing market is currently frozen by the spread between current rates and the "lock-in" rates of 2021. The trade here is not to buy housing yet, but to watch the transmission mechanism of Fed policy. Until the 30-year fixed drops significantly below 6%, housing volume will remain sluggish. WATCH. Wait for confirmation that Fed cuts are actually compressing the spread on mortgage rates before re-entering housing plays. Inflation re-accelerates, forcing rates higher and crushing housing further. |
Bloomberg Markets
Toll Brothers Signs Fewer Contracts Than Expe...
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Feb 13
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WATCH
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Sen. Thom Tillis
US Senator (R-NC), Member of Senate Banking Committee
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"I have no intention to allow any federal or nominee to move out of committee and be confirmed until the matter is settled... I am not going to confirm the next Fed Chair until I can be absolutely certain that these sorts of flexes do not always have members of the Federal Reserve Board... looking over their shoulder." The market is anticipating a transition in Fed leadership (potentially to Kevin Warsh). Tillis is explicitly freezing this process. While his goal is to protect Fed independence (keeping Powell in place), this introduces governance friction. It delays any policy shift associated with a new Chair and prolongs the current regime, adding political volatility to the yield curve. WATCH. The "Warsh Transition" is effectively paused. This reinforces the status quo (Powell) but increases headline risk regarding Fed governance. If the investigation is resolved quickly, the blockade lifts, and the market may rapidly re-price the probability of a new Chair. |
Bloomberg Markets
Powell Probe Just a 'Flex,' Say Senator Tilli...
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Feb 12
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NEUTRAL
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Roger Ferguson
Former Vice Chair, Federal Reserve
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Ferguson states, "The economic data does not support an aggressive move down by the Fed. Maybe one more and then done." He notes inflation is "sticky" and the 10-year yield hasn't moved much because inflation expectations are stable. The market is pricing in a series of cuts (potentially expecting a new Chair like Warsh to cut for productivity reasons). Ferguson argues this is historically "misguided." If the Fed pauses after one cut, the aggressive bond rally trade (betting on plummeting yields) is off the table. Yields will likely flatten or remain elevated due to sticky inflation and strong growth. NEUTRAL. Do not bet on a crash in yields/aggressive easing. A sudden deterioration in the labor market could force the Fed to cut faster than Ferguson expects. |
CNBC
The economic data doesn't support an aggressi...
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Feb 12
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NEUTRAL
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Julia Coronado
Founder and President of Macro Policy Perspectives
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"The unemployment rate... has actually ticked lower... [Inflation] is going to be about 3%... You're really going to be looking at the second half of the year before they could see the kinds of easing... maybe once or twice." The market or specific investors (like Einhorn) expecting "a whole bunch" of cuts are misinterpreting the low job growth numbers. The Fed sees this as structural (demographics), not cyclical weakness, and will keep rates steady to fight sticky inflation and tariff effects. Fade aggressive rate cut bets. Yields are unlikely to plummet in the short term. A sudden spike in unemployment or economic "spiraling" would force the Fed's hand. |
CNBC
Hiring trend barely in positive territory, sa...
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Feb 11
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LONG
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Steve Liesman
Senior Economics Reporter
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The economy added 130k jobs, which is considered "out of sample" (stronger) than the Fed's expectations for a cooling market. A strong labor print removes the urgency for the Fed to act. The data supports a "higher for longer" narrative, with Liesman predicting zero rate cuts for the remainder of the year. Expect rates to stay elevated; rate cut expectations are "dying." Sudden deterioration in labor data in subsequent months. |
CNBC
Squawk Pod: January’s jobs picture & AI disru...
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Feb 11
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LONG
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Claudia Sahm
Economist, Federal Reserve Board
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Sahm states, "We still see wage growth slowing, unemployment rate drifting up... labor demand for workers is not keeping up with the supply of workers." A labor market where supply exceeds demand is disinflationary. Slowing wage growth removes the primary sticky inflation threat. This gives the Fed the green light to cut rates to prevent the "gradual problem" from becoming a recession. Bond yields should fall (prices rise) as the market prices in these cuts and the cooling growth outlook. LONG (Buy Bonds / Bet on Lower Rates). If immigration or supply shocks re-ignite inflation, forcing the Fed to hold rates higher for longer. |
Bloomberg Markets
What the US Jobs report means for the Fed
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Feb 09
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LONG
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Mohamed El-Erian
Chief Economic Adviser at Allianz / Warden Professor
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El-Erian agrees with the view that the Federal Reserve has room to lower interest rates. AI-driven productivity enhancements will increase the economy's "safe speed limit" (non-inflationary growth potential). This allows the economy to grow without overheating, giving the Fed permission to cut rates without sparking inflation. Historical precedents of productivity booms allowing for easier monetary policy. If AI adoption ("diffusion") is slower than expected, productivity gains won't materialize, keeping inflation and rates higher. |
CNBC
Volatility, dispersion and fragmentation are ...
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