Introduces news of criminal investigation into Fed Chair Powell over Fed HQ renovation, framing it as about Fed independence and political pressure on interest rates.
Sam
Cooper Howard
The market views the probe as a potential negative, threatening Fed independence. It ramps up pressure on the Fed to lower interest rates.
Cooper Howard
A key concern: lowering short-term rates may not help the long end of the curve; long-term yields moved up. If Powell is ousted and the market sees it as a loss of Fed independence, longer-term yields would move higher.
Asks about the muted market reaction, noting the 10-year yield remains rangebound below 4.20%.
Sam
Cooper Howard
The response is muted but amps up pressure on the Fed. For longer-term yields, this puts a floor under them. The risk is for potentially higher longer-term yields for the rest of the year.
Notes major banks (JP Morgan, Goldman, Morgan Stanley) are adjusting rate cut expectations later into the year.
Sam
Cooper Howard
Schwab remains in the camp of 1 to 2 additional rate cuts this year.