Journalist: We are finally approaching the meneada low of fees of the Fed. An “consummate fact” that, however, was discussed a lot and took time to consummate. Is it necessary? Or is it a concession to the suffocating pressure of President Trump? Will you fix the anemia problem that the labor market exhibits? Or can you do little, in addition to inflating the stock quotes, to compensate for deportation policy and population aging? Can the cylinder headlet come out? That is, the Fed lowers the rates and that the long rates rise.
GG: One listens to Wall Street, finally, the first criticisms open to Trump’s interference in the management of monetary policy. Ken Griffin, Citadel’s CEO, and a great contributor to the Trump campaign, warned that it is an error to attack the independence of the Fed because it can lead to higher inflation rates and, therefore, to also higher long rates.
GG: Correct. What is not so obvious is that the future descendes the decline of rates of a quarter point as a certainty – and risk the possibility that the cut is half a point – and that, as long as the fate of the independence of the central bank is discussed, and that Trump is placing an official of his in the Board of Governors, the long rates are also falling.
Q.: Does Stephen Miran speak, the head of the President’s Economic Advisors Council, who has said he intends to be governor of the Fed without giving up his current position, taking a temporary license until January and then returning to his post?
GG: The Senate is in the process of approving its designation. And the Republicans have the votes to do so. It would be the unpublished case of an employee of the Executive Power who would exercise as an independent governor of the Fed. And that he has also said clearly that he hopes to return to his work when the remaining mandate of the renouncing governor Kugler expires next January.
Q.: What does it mean with all this?
GG: I answer the question. We take off the loss of rates. Will the shot out of the cylinder head? How much credibility does the Fed have now that Trump submits it to siege, and begins to put his people there? Well, long rates are clearly going down.
Q.: In principle, they buy the idea peacefully. Although you already warned us that Treasury Secretary Besent has anesthetized to the “vigilant Bond.” How genuine is this signal?
GG: Keep in mind the coexistence of two realities. Long rates lower. Gold up to the price. The two movements are strong. And they happen in parallel. The valuation of gold is very sustained. Almost 3% last week. 8.5% last month. 39% since the year began. The records pass as posts. 3700 dollars ounce does not look so far.
Q.: It is clear that there is a distrust that mobilizes it. And interest rates are not a brake. Much less if now the Fed is going to cut them more.
GG: Goldman Sachs said last week, that if the independence of the Fed is damaged, and as a consequence, inflation is discouraged, reaching 5,000 dollars the ounce is not out of the radar.
Q.: How is it explains that long rates do not go up to protect?
GG: We already talked about Besent and his key contribution. The usual correlation broke.
Q.: Because the treasure gave limit to the placement of long bonds, right? And more short -termly finances using letters of one year or less.
GG: That’s how it is. This could be approved by the tax reduction package, which increases the expected fiscal deficit of the coming years, without causing any complaint in the bond market.
Q.: Besent says that the fiscal deficit will fall courtesy of the greatest collection of tariffs.
GG: We will see that justice says. The Federal Court of Appeals states that Trump exceeded the delegated powers to apply tariffs.
Q.: In that context that long rates fall is very suggestive.
GG: Besent independent the offer of bonds of the fiscal deficit bonds. Don’t forget. Red is greater or less, covered with letters to short -term rates.
Q.: And then why are long rates falling?
GG: Good question. And what is the record: the fall is not less. The Bloomberg Global Index points out that the bonds step on the territory of a Bull market after a three -year crucis road. They climbed 20% from the floors.
Q.: With gold breaking record after record.
GG: August at the beginning of September, the situation was another. The 30 -year rate, which is the most sensitive for its great duration, climbed from 4.80% to almost 5%.
Q.: Monday and Tuesday of last week Amagaba exceed 5%.
GG: And today is 4.71%. It was a resounding turn. If you take the rate of 10 years, which is more liquid, it traveled from 4.30% to 4.07%. The entire curve collapsed from Wednesday. That was where the bonds flew.
Q.: What is the reason?
GG: The same that consecrated the conviction that the Fed will cut the rate at its next meeting. The weakness of the labor market issued the safe -conduct.
Q.: Does it mean that there are no fears for inflation on the rise?
GG: Yes there are. And inflation is not going to love perhaps until 2026. But it is understood that the anemia of the labor market justifies the right of exceed. In other words, the independence of the Fed is in the center of a struggle, but the decision to lower the rates is perfectly credible and valid. It is not a funny concession to the President. Although it coincides with your personal desire.
Q.: Do you think it will be effective in improving that situation? Can rates decrease the effect on the job offer derived from migratory policies? Or the natural aging of the population?
GG: If that were the whole problem, it would be obvious not. But the unemployment rate is rising. The number of people who want to work – although they have not actively sought employment – too. And the one that works part -time, but I would like to do it full time, the same. There is not much margin to lower the rates, but it seems reasonable to start using it. If what asks me is what would be more effective … I have no doubt that the former would be to banish uncertainty and inflationary pressures generated by economic policy with tariffs and deportations.
Q.: Wall Street also quotes record in record. How serious can the problem of the labor market be, which does not affect it?
GG: It is incipient. And in part, it associates it with the bonanza of artificial intelligence, and therefore, it does not affect it and stimulates it. But above all Wall Street considers that the Fed will take action on the matter and can resolve it without reaching older ones.
Source: Ambito
I am a 24-year-old writer and journalist who has been working in the news industry for the past two years. I write primarily about market news, so if you’re looking for insights into what’s going on in the stock market or economic indicators, you’ve come to the right place. I also dabble in writing articles on lifestyle trends and pop culture news.
