Fed Chair Jay Pal is out with some comments on the economy. This happened just moments ago and our Steve Leeman joins us right now with more. Steve, Becky, thank you.Fed Chair Jay Powell in testimony before Congress today will maintain his views on the economy uh policy and tariffs in his uh press conference last week saying the Fed is well positioned to learn more about the course of the economy before adjusting policy. The Fed, he says, needs to prevent a one-time price increase from tariffs from becoming ...

Federal Reserve Chair Jerome Powell testifies before the House Financial Services Committee on “The Federal Reserve’s Semi-Annual Monetary Policy Report.” ...

Investment Rating - The report maintains a base case view that oil prices will drift lower, with forecasts of US$66 per barrel for 2025 and US$58 per barrel for 2026 [3][18]. Core Insights - The recent spike in crude oil prices, rising over 15% to approximately US$75 per barrel, is attributed to geopolitical tensions, particularly fears of conflict between Israel and Iran [2]. - The report suggests that the inflationary impact of a sustained US$10 per barrel increase in oil prices will be limited across Asia, with an average CPI impact of 0.2 percentage points [5][12]. - The analysis indicates that the impact on GDP growth from rising oil prices is marginal, estimated at an average drag of 0.1 percentage points [16]. - Major energy importers in Asia, such as Thailand and Korea, are expected to bear the brunt of higher oil prices, with trade balances negatively affected [17][21]. Summary by Sections Oil Price Impact - A sustained increase in oil prices could lead to a surge in prices to US$120-130 per barrel in extreme geopolitical scenarios [3]. - The report highlights that the initial inflationary impact from a US$10 per barrel increase is manageable, with economies like the Philippines and Thailand experiencing more noticeable effects due to efficient pass-through mechanisms [5][6]. Inflation and Monetary Policy - The report concludes that the current oil price increase will not significantly disrupt the rate cut cycle in Asia, as inflation is expected to remain within target ranges for most economies [18][20]. - For economies like Korea, Malaysia, Indonesia, and Singapore, oil prices in the range of US$75-90 per barrel could complicate monetary policy responses [12][20]. Trade Balance and External Accounts - The report notes that the impact on trade balances varies across the region, with major energy importers facing a higher burden from increased oil prices [16][21]. - The report emphasizes that the current external accounts are stronger compared to previous periods of energy price shocks, which should help mitigate some negative effects [17].

The amount of the tariff affects, the size of the tariff affects their duration, and the time it will take are all highly uncertain. So that that is why we think the appropriate thing to do is to hold where we are. As we learn more and we think our policy stance is in a good place where we're well positioned to react to incoming developments, we have to be forward looking.And the thing that every forecaster, every outside forecaster and the Fed is saying is that we expect a meaningful amount of inflation to ...

Federal Reserve Policy & Economic Outlook - The Federal Reserve maintains a "wait and see" approach, with expectations of eventual rate cuts, but less aggressively than previously anticipated [2] - The market is data-dependent, with the possibility of the Federal Reserve not cutting rates this year [2] - Tariffs and higher oil prices could lead to underestimation of inflation [3] - A weaker labor market could prompt the Federal Reserve to move more quickly towards lower rates [11] - The market anticipates the Federal Reserve to act on data in September, considering inflation and employment data [13] Bond Market Dynamics - Investors require a higher term premium to hold U S debt [3] - Foreign buyers of Treasury bills are holding the line despite tariff concerns [6] - The 10-year Treasury is relatively attractive, while the 30-year Treasury above 5% would be interesting [18][19] - The treasury may change the dynamics around supply [20] - Single B bonds present opportunities for compression ahead [48] Credit Market & Investment Strategies - Credit spreads have recovered to pre-stress levels, with a preference for double B bonds over triple B bonds for excess carry [32] - Expectation of spread widening over the summer due to slowing growth data and the Federal Reserve remaining on hold [34][35] - Focus on high-quality fixed income due to uncertainty from tariffs, weather, and fiscal policy [36] - Mounting risks are being digested due to high starting yield levels, making fixed income attractive from a risk-adjusted perspective [39] - The market favors shortening duration and the belly of the curve (five to seven year) in investment grade [43][44] Specific Company & Market Events - X AI, Elon Musk's startup, is raising $900 million in debt and equity, offering sweeter pricing on the $5 billion debt part due to burning through $1 billion a month [31] - UnitedHealth and Enbridge had top deals, driving volume to about $18 billion [30] - Key economic data to watch includes the Consumer Price Inflation report and Jay Powell's testimony on Capitol Hill [50][51]

Interest Rate Policy & Economic Outlook - Market anticipates approximately two rate cuts by year-end, while some Fed officials suggest potentially only one [1] - There's significant uncertainty and deteriorating sentiment in the economy, making it difficult for the Fed to balance monetary policy [2] - Political factors, including a new Fed chair, may lead to increased pressure for rate cuts due to the impact of interest rates on large debts [3] Impact of Rate Cuts - Lowering rates could reduce returns on assets, requiring interventions that devalue money [4] - Aggressive rate cuts could negatively impact the bond market [5] - Monitoring the yield curve, dollar movement, and gold prices can reflect shifts away from bonds due to concerns about the value of money [6] Monetary Policy & Elections - Midterm elections and potential changes in monetary policy create a period of concern for the markets [5]

LOWER AT 3.5%, 76 $.06 AS POSSIBLY DIPLOMACY COULD RULE THE DAY. POWELL'S BIGGEST CRITIC. PRES.TRUMP: WE HAVE A STUPID PERSON AT THE FED. HE IS A POLITICAL GUY WHO'S NOT A SMART PERSON. WHAT I WILL DO, HE GETS OUT AND ABOUT NINE MONTHS.HE GETS TERMINATED. MAYBE I SHOULD GO TO THE FIT. MY ALLOWED TO APPOINT MYSELF AT THE FED.I WOULD DO A MUCH BETTER JOB. WE SHOULD BE TWO POINTS LOWER. LISA: PRESIDENT DONALD TRUMP CONTINUING HIS CRITICISM OF THE FED CHAIR, WRITING ON TRUTH SOCIAL "TOO LATE JEROME POWELL IS CO ...

I'm pleased to uh bring in uh Fed Governor Christopher Waller. Uh he is um joining us this morning from Washington. Good morning, Governor Waller. Good morning, Steve.Thanks for having me on. Uh thank thanks for joining us. Um I just want to begin um big debate and you can see it in the outlook for rates at the at at uh from the uh summer of economic projections.Where do you stand in this debate right now over how much concern we all should have over coming potential inflation from tariffs. Steve, you know, ...

We've had the decision from the MPC to keep interest rates unchanged by a margin of 6 to 3, a bit closer than some had expected. Just take us through the thinking there. So we decided to hold rates at 4.25%.Today, we have been able to cut rates four times over the last year. But given the uncertainty facing the economy, we decided to hold at this event. And one of those uncertainties, of course, are the unfolding events in the Middle East and the impact that could have on the oil price.At what point would t ...

We spoke just a few moments ago about what we were expecting. 7-2 seems to have been the consensus a little bit may be more dovish in terms of the vote split. That looks like it, Guy.Absolutely. As you say, the hold was widely expected, but all the focus as your last guest was also saying, is on whether the break down was going to be seven members of the monetary policy committee voting to to hold and to for a quarter point cut. But in fact, we've got three for a quarter point cut.And it looks like the addi ...