Yesterday, Wosh’s speech in Jackson Hole was throughout relatively hawkish.
First, he said his interpretation of the U.S. labor market is positive, believing that the U.S. unemployment rate of 4.1% in June and July is at historically low levels.
Second, he believes the U.S. economy is overall strengthening, and emphasized that both the real economy and Wall Street have shown very strong resilience over the past few months. In his view, this is a very good sign for the U.S. economy. He also gave the AI industry as an example, saying that the current development of AI is beyond what the original supporters expected, and that profits are very attractive.
Third, the biggest point is his inflation read on the United States in recent months: although it has been falling from its high in May, he does not see a structural turning point. He emphasized that the Fed’s 2% inflation target remains firmly unchanged. He believes inflation will not naturally fall—it will require the Fed to take action. In my view, this is an indication that the Fed will likely take further rate-hiking action next.
The prediction given by Deutsche Bank after Wosh’s speech is that the Fed will raise rates by 25 bps twice in September and December.
But I think the Fed will only raise rates by 25 bps in September.
Reason one: the Fed’s current rate of 3.75_4.00 has historically been on the high side.
Reason two: as the U.S. enters the midterm election season, public dissatisfaction with the long-drawn-out U.S.-Iran war will also likely flare up. As the anti-Trump movement develops, the pressure facing the Trump administration will become increasingly prominent, forcing it to make concessions. Possibly before winter arrives, the U.S. and Iran will reach a framework-level ceasefire agreement; with conditions, the Strait of Hormuz can resume navigation. Oil prices would fall, U.S. CPI expectations would decline, and for cautious reasons the Fed would refrain from hiking in October. In December, it not only would not hike, but could even restart a cycle of rate cuts.
Reason three: the issue with U.S. Treasuries has become more prominent, forcing the Trump administration to increase tariffs and taxes and reduce war spending. Increasing tariffs faces the challenge that it cannot afford to have trade partners who are needed while seeking concessions regarding the Iran war. Cutting war spending would also trigger audits of the war department. It would all require it to end the Iran war as soon as possible. Although the quick lightning strike against Venezuela went smoothly and made a lot of money, being stuck in the Iran war has cost him an even bigger loss. A businessman-turned-Trump would be expected to stop losses in a timely manner—this is foreseeable. All of this suggests that the Fed will not raise rates multiple times.#沃什称通胀是美联储首要关注
First, he said his interpretation of the U.S. labor market is positive, believing that the U.S. unemployment rate of 4.1% in June and July is at historically low levels.
Second, he believes the U.S. economy is overall strengthening, and emphasized that both the real economy and Wall Street have shown very strong resilience over the past few months. In his view, this is a very good sign for the U.S. economy. He also gave the AI industry as an example, saying that the current development of AI is beyond what the original supporters expected, and that profits are very attractive.
Third, the biggest point is his inflation read on the United States in recent months: although it has been falling from its high in May, he does not see a structural turning point. He emphasized that the Fed’s 2% inflation target remains firmly unchanged. He believes inflation will not naturally fall—it will require the Fed to take action. In my view, this is an indication that the Fed will likely take further rate-hiking action next.
The prediction given by Deutsche Bank after Wosh’s speech is that the Fed will raise rates by 25 bps twice in September and December.
But I think the Fed will only raise rates by 25 bps in September.
Reason one: the Fed’s current rate of 3.75_4.00 has historically been on the high side.
Reason two: as the U.S. enters the midterm election season, public dissatisfaction with the long-drawn-out U.S.-Iran war will also likely flare up. As the anti-Trump movement develops, the pressure facing the Trump administration will become increasingly prominent, forcing it to make concessions. Possibly before winter arrives, the U.S. and Iran will reach a framework-level ceasefire agreement; with conditions, the Strait of Hormuz can resume navigation. Oil prices would fall, U.S. CPI expectations would decline, and for cautious reasons the Fed would refrain from hiking in October. In December, it not only would not hike, but could even restart a cycle of rate cuts.
Reason three: the issue with U.S. Treasuries has become more prominent, forcing the Trump administration to increase tariffs and taxes and reduce war spending. Increasing tariffs faces the challenge that it cannot afford to have trade partners who are needed while seeking concessions regarding the Iran war. Cutting war spending would also trigger audits of the war department. It would all require it to end the Iran war as soon as possible. Although the quick lightning strike against Venezuela went smoothly and made a lot of money, being stuck in the Iran war has cost him an even bigger loss. A businessman-turned-Trump would be expected to stop losses in a timely manner—this is foreseeable. All of this suggests that the Fed will not raise rates multiple times.#沃什称通胀是美联储首要关注