The Market Tells Fed Chairman Kevin Warsh “You Blew It Already”

The 30-Year Long Bond Yield Is the Highest in 19 Years. There was only a 35 percent chance of a rate hike today, but the market reacted as if the decision to stay on hold was unexpected. 30-Year Long Bond FOMC Reaction At 10:00AM today the long bond yield was 5.10 percent. The yield blasted straight up as Fed Chair Kevin Wash was trying to justify the Fed’s pause. Essentially, the market doesn’t think much of the Fed decision today, and neither do I. 10-Year Treasury Note Reaction When Does the Fed Raise Rates? Only when the market expects it. Rate hike odds heading into the meeting were about 35 percent. September Rate Hike Odds The odds of a September hike are now 63.2 percent. But that’s down from a 76 percent chance of at least one hike yesterday. Fed Chairman Tries to Explain Why an Interest Rate Pause Isn’t a Pause Earlier today, I commented Fed Chairman Tries to Explain Why an Interest Rate Pause Isn’t a Pause Reporter Q&A Message from the MarketsQ: Steve Liesman, CNBC: What message are you getting from the market as to where policy out to be right now? A: The message from markets is the message from markets. What we are tying to de is get an unfiltered message from markets. Mish: Warsh rambled on for a minute unwilling to say the message from the markets is rates are too low. Q: Steve Liesman: I get that Mr. Chairman. An the follow-up question is if the market’s are talking to you, and if it’s real rates are higher, it would suggest that’s where the funds rate out to go. A: Interpreting markets is an imperfect business. We can think these things are over-determined. Blah blah blah Even though we have not done much in 42 days the markets have done quite a bit.Why Shouldn’t Rates Be Higher? Q: Neil Irwin, Axios: Why should rates not be higher today? A: Rates are higher today than they were 42 days ago. Markets have made decisions because we stepped back in part from trying to influence those. Market judgements have moved up. We are observing them. So I think it’s a mischaracterization to say the markets haven’t reacted because we didn’t move today. We will continue to monitor the markets and see how they react and that can help our decision making when we meet in 7 or 8 weeks. … This is a period of watchful thinking not watchful waiting. Mish: That is disingenuous. Nobody is saying the markets didn’t react. What we are saying is the Fed is ignoring the markets and doing what it wants.Explain the Pause Q:Edward Lawrence, Fox News: What specifically in your mind would be the argument for a pause today? A: I wouldn’t characterize what we did today as anything like a pause. I would characterize what we did as a rigorous review of the economic situation. I would characterize what we did as a review of the big hard questions. And I characterize it as a view of what our own homework is. If you were to force a description of this as a pause, I would say financial market prices would take the other side of that. The financial markets in this intermeeting period did not pause. They reacted to the inflation data in one direction, strong economic growth in the other direction. MIsh: A pause by any other name is a pause. Disingenuous Warsh I did not expect the Fed to hike today. Going into the meeting, I commented that I though the odds were more like 15 percent than 35 percent. But we didn’t expect nonsensical statements as to why a pause isn’t a pause either. Also note Powell responded to CNBC’s Steve Liesman that “The message from markets is the message from markets. What we are tying to de is get an unfiltered message from markets.” I am pleased to report we have an unfiltered message in real time. In case you missed the message, here it is. “Dear Fed you blew it already.” Why would any investor buy any sovereigns’ 30-year bond? The FED is kicking the can down the road. Expect more stagflation as a result. Wars are inflationary. Tonight the Iranian War expanded. It is now a regional war as well as NATO involvement plus Ukraine so there is Israel, US, Saudi Arabia, Jordan, Ukraine and most likely Germany, France and the UK on one side with possibly the UAE mixed in. On the other side is Russia, China, Iran, Iraq, Yemen. Sitting on the fence Turkiye, Pakistan. Oman, Qatar, Syria, India. The pawn is Lebanon. Nevermind the ME going up in flames the Digital Zero Overlords have spoken! Walrus is making the case that the Fed is useless and not needed, let the market set the rate. Maybe the plan with all his committees and task forces is to eliminate the Fed. Re: Also note Powell responded to CNBC’s Steve Liesman that “The message from markets is the message from markets. What we are tying to de is get an unfiltered message from markets.” Powell??!! Or is it Warsh? The FED doesn’t work. It doesn’t fulfill or accomplish it mandates. Never has. Why? Because it was designed make the world safe for private banking and reinforce banking’s monopoly paradigm for the creation and distribution of virtually all new money. Raising interest rates is a heavy handed piss poor policy. This is mostly because “free” market theoretics is actually a fetishized misnomer for TOTAL freedom IOW chaos because in the human universe and human systemic policies there is only freedom within known and enforceable barriers. Thats because there’s this “little” thing called ethics…which people who can only think in terms of an orthodoxy blithely ignore. Orthodoxies prevent actual looking/perceiving and so trap people into stupidities, falsehoods and unworkabilities. You want to end inflation and supercharge the robustness of the economy, use double entry bookkeeping’s operations of equal debits and credits that sum to zero applied to price at retail sale with a 50% Discount/Credit to the consumer and Rebate/Debit back to the merchant granting the 50% discount and voila! beneficial price and asset deflation. Just keep doing the debits and credits until you see it. I’m not disagreeing with what you say above, but the purpose of a central bank is to fund the government’s deficit. Those aren’t my words: I got them from a libertarian writer about fifty years ago. The central bank is there to make sure that there is never again a situation where the government only has 37c left in the Treasury. The rest of what the central bank does is window dressing. Ten year barely moved. MBS’s came off their lows as the day progressed. I’ll leave it to others to explain what that means in relation to the long bond. As long as he keeps taco happy, he will be fine. Yup now the only people that will know is kw/ trump friends and family. I wonder if trump will leak to truth social. Very disappointing. As usual from the Fed. More inflation and the shit will ultimately hit the fan. Is this an example of half ass kissing? Ran into a real estate broker in the store today and he gave me a glum face when I asked him how’s business with current interest rates. He remarked “We’re figuring higher for way longer” and even right now 7% for a 30-year is no fun. It’s what the majority of voters voted for. I don’t think Trump voters voted for this. Trump won mostly due to Biden’s inflation. Trump since assuming office has increased inflation. Interest rates are the cost of money. Imagine how the bond yields would have reacted if the Fed had done what Trump wanted and actually lowered the rates. The fed will cut rates when the DOW, S@P and Nasdaq are cut in half. Either way, we are looking at eventual disaster as our worthless Congress and POTUS have done nothing to correct the serious problems we have been facing for decades due to fiscal irresponsibility, ruinous wars and a whole lot of other problems. There may eventually be a bright future for the USA, but not before a really big fall. The current military disaster in Iran may be the spark that lights the fuse.