The Rate Guy The Fed Will Cut Even if the Govt is Still Shut Down
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Oct 13, 2025 The discussion kicks off with whether the Fed will meet amid a government shutdown, highlighting its operational independence. Insights on how Fed decisions are made without fresh data reveal intriguing strategies in play. Potential Fed cuts this year and next are predicted, alongside their implications for the 10-year Treasury yields. The speakers argue that job market shifts drive Fed decisions more than inflation. Lastly, they tackle misconceptions around Treasury demand, asserting the U.S. remains a financial 'mattress' despite challenges.
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Host's Difficult Birthday Week
- JP shares he turned an age that 'does not begin with a five' and is feeling the effects of getting older.
- He also mentions saying farewell to their family dog the day before his birthday which made the week emotionally tough.
Fed Operates Independently During Shutdowns
- The Fed will meet and decide on rates even if the federal government is shut down on Oct 29.
- The Fed funds operations are self-funded via interest on securities so congressional appropriations aren't required.
Use Multi-Year Caps To Hedge Rate Risk
- Protect against rate uncertainty by considering two- to three-year cap terms around 3.50–3.75%.
- One-year caps are nearly free but longer caps hedge against a fast V-shaped rebound and potential re-hikes.