Washington DC. Aean Javvers has this latest. Aean, >> Melissa, CNBC has obtained a clip exclusively of an interview with former White House adviser Steve Bannon.The interview is conducted by Sean Spicer, who's of course the former press secretary for Donald Trump in his first term. Uh, in this interview, Bannon makes a provocative suggestion about the future of Scott Bessant, who's the Treasury Secretary, and whether or not he should have a role at the Fed. Here's what he says.I am a big believer that on an ...

Core Viewpoint - The discussion centers around the controversial suggestion by Steve Bannon that Scott Bessant should serve as both the Treasury Secretary and the Chairman of the Federal Reserve, particularly in the context of upcoming midterm elections [2][5][6]. Group 1: Proposal and Implications - Bannon advocates for Bessant to hold both positions on an interim basis, suggesting it could help navigate economic policies through the midterms [2][12]. - The idea of a dual role for Bessant raises concerns about the independence of the Federal Reserve, as it could blur the lines between fiscal and monetary policy [5][11]. - Historical context is provided, noting that the independence of the Fed has been a significant concern since the 1935 accord and the 1951 agreement asserting its autonomy [8][9]. Group 2: Political Context and Reactions - Bessant has previously expressed a desire to remain as Treasury Secretary, indicating he does not wish to take on the Fed chair role [4][5]. - The proposal is seen as politically motivated, aiming to align economic strategies with the administration's goals leading up to the midterms [12][14]. - There is speculation about whether Republican senators would support this idea, given the shifting political landscape and the potential for overlooking Fed independence for economic alignment with Trump's policies [17][18]. Group 3: Market Reactions and Future Considerations - Market analysts express skepticism about the proposal, suggesting it could undermine confidence in the U.S. bond market and the Fed's independence [11][15]. - The conversation around this proposal indicates a shift in what is considered acceptable in political discourse regarding the Fed's structure and leadership [15][18]. - The necessity for congressional approval is highlighted, emphasizing that the administration cannot unilaterally implement such a significant change [16][17].

Group 1 - The discussion highlights that concerns regarding the independence of the Federal Reserve may be overstated, as indicated by the wide spread in the dot plot, suggesting no cohesive voting block among Fed members [2] - There is an expectation that inflation will not significantly rise due to tariffs, particularly affecting consumer electronics, and that consumer inflation expectations are not being materially impacted [3][4] - The market anticipates further rate cuts from the Fed, with a cautious approach suggested regarding the pace of these cuts, indicating a preference for a 25 basis point reduction [5][6] Group 2 - The current economic indicators show mixed signals, with labor market weakness contrasted by strength in retail sales, leading to uncertainty about the Fed's policy decisions [8] - The expectation is that the 10-year yield will remain around 4.25% through the end of next year, even as the Fed continues to cut rates [9][10]

Group 1: Mortgage Industry Insights - The issue of "occupancy fraud" in residential lending is gaining attention, with notable figures involved in discrepancies regarding primary residence claims [1] - Freddie Mac and Fannie Mae are losing market share to non-Agency channels, indicating a shift in the mortgage landscape [6] - The introduction of the Uniform Appraisal Dataset (UAD) 3.6 by Fannie Mae and Freddie Mac aims to improve data standardization and streamline the appraisal process, with a limited production period starting September 8, 2025 [8] Group 2: Market Trends and Economic Indicators - Mortgage rates have reached new year-to-date lows, with the 30-year and 15-year rates falling to 6.26% and 5.41% respectively, although they remain higher than a year ago [15] - Initial applications for jobless benefits in the U.S. have decreased, suggesting a stable employment outlook which may impact future interest rate decisions by the Fed [13] - The bond market experienced a sell-off following Fed Chair Powell's cautious stance on inflation, indicating potential volatility in investor sentiment [12]

Core Points - Federal Reserve Governor Stephen Miran stated he made his interest rate decision independently and was not pressured by President Trump [1][2] - Miran voted against a quarter percentage point reduction, favoring a larger cut, and his projections for the fed funds rate were significantly lower than those of other Federal Open Market Committee members [2] - Concerns regarding the independence of the Federal Reserve have increased since Trump's second term began, with the president advocating for aggressive rate cuts [3] - Trump has attempted to remove Governor Lisa Cook and indicated he would evaluate Powell's replacement based on their willingness to ease monetary policy [4] - Miran dismissed concerns about potential conflicts of interest regarding his position, emphasizing his commitment to serve until January 2026 [4][5] - Miran is scheduled to speak at the Economic Club of New York, a significant platform for business and political leaders [6]

Core Viewpoint - Minneapolis Fed President Neil Qashqari anticipates two more rate cuts from the central bank this year, despite concerns about inflation and the Fed's commitment to its 2% target [1][2]. Economic Outlook - Qashqari expresses concern over potential erosion of public belief in the Fed's commitment to the 2% inflation target, especially as rate cuts are considered while inflation remains elevated [2][4]. - The Fed does not expect to hit its inflation target until 2028, indicating a long-term approach to monetary policy [3]. Inflation Dynamics - Housing services inflation is on a steady decline, and there is confidence that both housing and non-housing services inflation will continue to decrease due to downward wage growth [6][7]. - Core goods inflation had previously turned negative but has risen again due to tariffs, which are viewed as a potential one-time effect rather than a persistent issue [7][8]. Fed Independence - There is a widespread appreciation for the importance of Fed independence in maintaining low inflation expectations and defending the dollar, with confidence that it will be protected from short-term political influences [10][11]. Market Reactions - Despite rate cuts, the long end of the yield curve has remained unresponsive, suggesting that the neutral rate of interest may have increased [14][15]. - Financial markets appear exuberant, with low credit spreads and a resurgence of meme stocks, indicating a disconnect between labor market signals and market behavior [17][18].

Fed Independence & Political Influence - The removal of a Fed governor based on accusations poses a significant threat to the Fed's independence [1][3] - Such a removal could set a precedent, allowing political influence to sway interest rate decisions away from the Fed's dual mandate [3][6] - Administrations typically favor lower interest rates, potentially leading to policies misaligned with maximum employment and price stability [6] Market Reaction & Economic Implications - Markets may not immediately react to the issue but could respond negatively if a governor is removed from the FOMC [4][6] - Political influence on interest rates could introduce inflation and risk premiums in the long-term bond market [7] - A Fed perceived as politically influenced could lead to higher premiums on long bond yields, counteracting the goal of lower long-term interest rates [7]

Core Viewpoint - The potential removal of Fed Governor Lisa Cook poses a significant threat to the independence of the Federal Reserve, as it sets a precedent for removing officials based on accusations rather than concrete evidence [1][3][6]. Group 1: Threat to Fed Independence - The ability to remove a Fed governor based on accusations could lead to a situation where any official could be dismissed if their policy views do not align with those of the current administration [3][6]. - The legal process surrounding the accusations against Lisa Cook must be allowed to unfold, as it is now in the court system [3][4]. Group 2: Market Response - The market's current lack of response to the situation may indicate that investors are focused on immediate decisions rather than long-term implications for Fed credibility and independence [4][5]. - If Lisa Cook is removed from the FOMC, it is anticipated that the markets will react negatively, as this could lead to interest rates being influenced by political motives rather than the Fed's dual mandate of maximum employment and price stability [6][7]. Group 3: Interest Rate Implications - A shift in the Fed's composition could bias interest rates towards being lower, as administrations typically favor lower rates, which may not align with economic appropriateness [6][7]. - The desire for lower long-term interest rates, as expressed by President Trump, could result in higher inflation and risk premiums in the bond market, counteracting the intended goals of lower rates [7].

Um, I wanted to ask about inflation expectations. Um, you've said the Fed can't take the stability of inflation expectations for granted. Um, you mentioned at the short run they've gone up a little bit.I wonder if you can talk a bit a bit about that. Um, and then also at the long run, I'm wondering do you see evidence that the debate over Fed independence and the growing deficit is putting pressure on inflation expectations. So, as you as you said, um, shorter term inflation expectations have tended to resp ...

Um, I wanted to ask about inflation expectations. Um, you've said the Fed can't take the stability of inflation expectations for granted. Um, you mentioned at the short run they've gone up a little bit.I wonder if you can talk a bit a bit about that. Um, and then also at the long run, I'm wondering do you see evidence that the debate over Fed independence and the growing deficit is putting pressure on inflation expectations. So, as you as you said, um, shorter term inflation expectations have tended to resp ...