Federal Reserve Bank of Cleveland President Loretta Mester has said that she does not think the U.S. central bank is at a point yet where it can hold interest rates steady for a period of time, given how stubborn inflation is. Federal Reserve Chair Jerome Powell has signaled the central bank may pause further rate hikes as it assesses the impact of its past tightening, as well as the effect of recent bank sector stress on lending and credit.
In this episode of The Higher Standard, Chris and Saied examine this news and determine the effect it will have on the economy as a whole.
They discuss news that JPMorgan sees treasuries as the best hedge against a slowdown, and sees the possibility of 10-year rates falling below 2.5% in the event of a deep recession. The 10-year Treasury rate was trading around 3.53% on Wednesday, after rising as high as 4.09% earlier in the year.
Chris and Saied look at comments from Atlanta Federal Reserve Bank President Raphael Bostic, who said that, if he were voting on monetary policy today, he would vote to hold interest rates steady, but added there is still a lot of data to come before the Fed's meeting in June.
They also offer some thoughts on Elon Musk's assertions that he doesn’t care if his inflammatory tweets scare away potential Tesla buyers or Twitter advertisers.
Join Chris and Saied for this fascinating and informative conversation.
Enjoy!
What You’ll Learn in this Show:
- Why most people believe that a recession is inevitable at this point.
- Why, despite the fanfare in the media, we're not yet in a credit tightening cycle.
- The importance of looking at the actual data, not the intentions.
- Why Atlanta Fed President Raphael Bostic says he would not cut rates unless inflation fell farther than to mid to high 3%.
- And so much more...
Resources:
"Default Fears Rattle Main Street Investors" (The Wall Street Journal)
"JPMorgan Asset Says Markets Are Right to Bet on US Rate Cuts" (Bloomberg)
"Home Prices Posted Largest Annual Drop in More Than 11 Years in April" (The Wall Street Journal)
"Fed's Mester says not yet at point where it can 'hold' rates" (Reuters)
"Fed's Bostic: if vote on policy were today, would vote to hold steady" (Reuters)
"Elon Musk: ‘I’ll say what I want, and if the consequence of that is losing money, so be it’" (CNBC)
