Traders Start Looking for a Fed Rate Cut Later This Year

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Danielle DiMartino Booth 8.0

Traders Start Looking for a Fed Rate Cut Later This Year

yields

I would say downside in yields is much more problematic and worrisome. Concerns about private credit creating systemic risk and potential disinflationary pressures from housing/energy suggest yield downside. Previous 10-year Treasury yield at 3.96% due to private credit concerns.

5 calls

no reliable edge (random outcomes)

4/1/2026 12:32:11 AM	short term down	5 days later	+0.70%	-0.70%
9/23/2025 12:30:00 AM	short term cautious down	5 days later	-0.14%	+0.07%
8/15/2025 5:52:45 PM	short term down	7 days later	-1.52%	+1.52%

Show all 3 yields results

Danielle DiMartino Booth

Private credit is a big mess with tentacles into conventional banking system through non-depository financial institution loans.

Conventional banks make loans to non-banks, and insurers are woven into private credit. Headlines are coming rapidly.
Is the private credit risk systemic or just isolated problems?

Host
Danielle DiMartino Booth

Risk could be systemic due to blowback into banks and multiple pledging of same collateral.

Examples: Archos, First Brands, MFS, Tricolor. Questions whether multiple investment banks were doing this.
Danielle DiMartino Booth

Fed is sitting on hands, wants to do nothing rest of year until Senator Tillis allows pathway for Kevin Warsh.

Gas prices go up quickly, sticky on way down. Fed officials could allude to entrenched mindset. Minutes could surprise with hike contemplation.
After high inflation, will we swing to disinflation or deflation?

Host
Danielle DiMartino Booth

Greatest risk is disinflation/deflation due to acceleration in downside of rents/home prices.

Momentum gains on way down historically hard for policymakers to control. Gasoline prices have squeezed away discretionary services/goods inflation - spending on essentials only.
Can central bank get out front of disinflationary tendency?

Host
Danielle DiMartino Booth

Probably not this central bank - institution plagued by paralysis.

Pathway for more than one rate cut in 2026 exists, but currently paralyzed.
Fed Chairman Powell stepping down in May? Who blinks - White House or Senator Tillis?

Host
Danielle DiMartino Booth

Tillis isn't blinking. Need ceasefire between Eccles building and White House.

Powell elected for full calendar year as FOMC Chair, could remain through December.
Where are bond vigilantes right now?

Host
Danielle DiMartino Booth

Bond vigilantes in full force. Downside in yields more problematic than market rallies.

10-year Treasury yield closed at 3.96% due to private credit concerns. White House needed distraction from financial challenges, got one with Iran situation.
You're linking domestic financial challenges to Trump's foreign policy?

Host
Danielle DiMartino Booth

Yes, would link any S&P 500 behavior to White House behavior - it's a known barometer.
Strong labor print last Friday - how did Fed take it?

Host
Danielle DiMartino Booth

14 consecutive months of negative revisions in real time - to be determined.

Need to see what happens with revisions.
Danielle DiMartino Booth

Yes, linking S&P 500 behavior to White House behavior - it's a known barometer.
Strong labor print last Friday - how did Fed take it?

Host
Danielle DiMartino Booth

14 consecutive months of negative revisions in real time - to be determined.

Need to see what happens with revisions.

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