'Circumstances Don't Call for Rate Hikes Right Now' Says Win Thin

Win Thin

Japan is struggling with high inflation and weak currency; they need to hike rates but are reluctant due to economic vulnerability from the Iran conflict; eventually they will have to intervene and hike more aggressively, as core inflation is creeping toward 3%.

Japan had 30+ years of strong currency and deflation, now the opposite problem; headline inflation looks good but underlying institutional factors show inflation rising.

Oil is back down to $70 range; does that mean US inflation concerns are done?

Paul

Win Thin

Inflation concerns are lower but not fully disappeared; Apple raised prices 20% on MacBooks and iPads due to AI boom, electricity costs, and supply chain issues in memory chips; there is underlying inflation beyond energy that the Fed should worry about.

Oil back to pre-conflict levels is good, but structural/AI-related pressures create upside risks to core inflation.

What did you make of the new Fed Chairman's first statement and press conference?

Paul

Win Thin

Chair Warsh is a man of few words, old school, doesn't want to lead or confuse markets; he wants markets to react to data, not to Fed guidance; he is making structural changes in a calm, measured way with five task forces.

He is one of 12 on FOMC, can't be dictator; central banks globally have gotten things wrong, and Warsh is re-examining the old way.

When markets are bouncing between rate hike and rate cut expectations, how do you deal with that raging debate?

Paul

Win Thin

The true signal is a robust US economy, high inflation, and a hawkish Fed; nine policymakers were willing to hike rates in June; the Fed is on hold and not cutting anytime soon; risks are tilted to the upside for rates.

The US economy has been surprisingly resilient through tariffs and oil shock; the ECB may have cut rates too early as eurozone inflation data suggests a mistake.

Nonfarm payrolls consensus is 110,000, down from 172,000; what's your view on the labor market?

Paul

Win Thin

The labor market has been surprisingly resilient; after weak Jan-Feb, we had three months of blockbuster jobs with a 3-month average of 188K; anything with three figures on Thursday would be good, double digits would raise concerns.

Earlier in 2025 average monthly gain was only 10K, which was weak, but recent data shows strength.

Bitcoin declined from 120K to 58K; what's your view through the prism of Bank of Nassau?

Paul

Win Thin

Bitcoin is not a safe haven, not a currency, not an inflation hedge, not a store of value; it is a risk asset; early adopters are fine but anyone coming in at 70K or 80K may not be happy.

No one has been talking about Bitcoin for three months; AI is the next shiny thing.

Should President Trump be happy with a 101 DXY?

Paul

Win Thin

No, the administration wants a weak dollar to encourage manufacturing, but the dollar is being dictated by the strong US economy and hawkish Fed; I had a weak dollar call earlier this year but was wrong.

Higher yields, higher energy prices, and a stronger dollar are three things the administration doesn't want.

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