Richard Fisher

"He's a man of great integrity. He has to worry how he goes down in history, and he is going to stick to his guns." There is heavy political pressure on the Federal Reserve to ease monetary policy. However, Fisher asserts that Powell (and potentially his successor, to protect their own legacy) will fiercely defend Fed independence and refuse to cut rates merely to appease politicians. If the Fed remains strictly data-dependent and ignores political noise, the market will have to price out any expectations of premature, politically motivated rate cuts. This keeps the yield curve elevated. SHORT. Long-duration Treasuries will remain under pressure as the Fed refuses to prematurely lower rates, keeping yields higher for longer than politicians desire. A severe macroeconomic shock, rising unemployment, or sudden deflationary data could force the Fed to cut rates organically based on their dual mandate, which would cause long-duration bonds to rally sharply.