#federal-reserve

#federal-reserve

In its sweeping Trump v. Wilcox decision in May, the Court ruled that the president "may remove without cause" officials in administrative agencies-a decision grounded in the Court's ringing endorsement of the so-called unitary executive. An elementary application of the unitary-executive theory would allow the White House to interfere, unchecked, with the Fed-just as the Court has empowered Trump to gut every other federal agency.

The pressure from Trump may not have been as effective as he'd hoped, with the base rate still at 3.75 to 4%, but the attention on the central bank has remained. On a near-daily basis, markets are reacting to hints dropped by regional Federal Reserve bank presidents, Fed governors, Federal Open Market Committee (FOMC) meeting notes, and data which may colour the decision-making of the group.

State of play: If the leadership triumvirate of chair Jerome Powell, vice-chair Philip Jefferson, and New York Fed President John Williams decide a rate cut is in order, they will surely be joined by the three Trump-appointed governors on the committee (Michelle Bowman, Stephen Miran, and Christopher Waller). But that only gets them to six votes of the 12 voting members of the FOMC. They need a seventh for a majority. Where, oh where, will the seventh vote come from?

The VIX, for those unfamiliar, measures expected 30-day volatility in S&P 500 options, essentially tracking how much investors will pay to protect against market swings. Readings above 20 signal heightened anxiety; readings above 40 often mark crisis points. On April 8, the VIX peaked at 52.33 after Trump's tariff announcement sent global markets into freefall. Thursday's spike stemmed from different concerns.

US job growth blew past expectations in September painting a rosy pre-shutdown picture and delivering the largest jobs gain in 5 months. Despite the data already being out of date, this will be the only major jobs release prior to the Fed's end of year meeting. Given the Fed minutes showed hesitancy within the ranks when it comes to a final interest rate cut in 2025, the strength of this jobs report will likely ensure nothing changes.

Mortgage rates are down despite the fed. I mean, Scott, you've got to work on this guy. He's got some real mental problems. There's something wrong with him. Be honest. I would love to fire his ass. He should be fired. Guy is grossly incompetent. And he should be sued for spending $4 billion to build a little building. I'm building a ballroom that's going to cost a tiny fraction of that and it's bigger than the whole thing put together.

The dollar index was stable on Wednesday, as investors awaited new catalysts that could shape the Federal Reserve's monetary policy trajectory. The FOMC minutes later today and Thursday's delayed nonfarm payrolls report are set to influence sentiment and shift expectations for the December Fed meeting. US Treasury yields reflected that uncertainty, with muted moves across the curve and the 10-year hovering near 4.12%.

A Fed official told Reuters that before resigning, Kugler asked Fed Chair Jerome Powell for a waiver to fix the disclosure issues and address investing rule violations tied to her spouse's trades including individual stock transactions and trades made around Fed policy meetings. The request was reportedly denied. As a result, Kugler missed a July 2025 Federal Open Market Committee (FOMC) meeting for personal reasons and, shortly after, resigned on Aug. 1.

A newly public financial disclosure filing has put a spotlight on the stock trades of one of the Federal Reserve's recently departed governors. Adriana Kugler - who stepped down from her post as the Fed's governor in August after being appointed in 2023 - filed a financial disclosure form that ethics officials declined to certify and referred to the central bank's inspector general's office for review.

"If you ask me, could [the absence of data] affect the December meeting?" Powell said last week in his news conference. "I'm not saying it's going to, but, yeah, you could imagine that." "What do you do if you're driving in the fog? You slow down," he said. "I don't know how that's going to play into things. ... But there's a possibility that it would make sense to be more cautious about moving. ... I'm not committing to that; I'm just saying it's certainly a possibility that you would say, 'We really can't see, so let's slow down.'"