What Makes Trump's Fed Chair Pick "Puzzling" & Case Against Rate Cuts

Core Viewpoint - The appointment of Kevin Walsh to the Fed raises questions about his potential stance on interest rates, given his hawkish history during his previous tenure from 2006 to 2011, which contrasts with the current administration's preference for lower rates [2][3][4]. Market Reaction - Following the announcement of Walsh's appointment, there was an initial rise in yields and a sell-off in risk assets, indicating market confusion and uncertainty regarding his future policies [7][8]. - The market is currently pricing in an increased expectation for rate cuts this year, despite strong economic indicators such as GDP growth and elevated inflation [10][12][14]. Economic Indicators - The economy is reportedly running at a nominal GDP growth of 3.5% to 4%, with fiscal stimulus and easy financial conditions contributing to this growth [12]. - Recent PPI data suggests inflation remains elevated, which could impact future PCE readings and complicate the case for rate cuts [12][13].