What is Fed?
The Federal Reserve System is the central banking system of the United States. Recent commentary has focused on rate path uncertainty, communication challenges, and the impact of fiscal deficits on inflation.
Company timeline
- Jun 2026 - Jack Farley stated that it is not possible to get core inflation below 3% when the government runs deficits of 6% of GDP annually; Michael Howell argued the Fed needs to tighten quickly to preempt a bigger inflation problem, but expects it won’t.
- Jul 2026 - Jim Bianco said that due to incessant attacks by Trump, Fed officials now assert independence and vote as they see fit, rather than waiting for the chairman’s lead.
- Jul 2026 - Luke Gromen said the fiscal situation suggests the Fed cannot hike rates this year; Russell Clark noted that some businesses are most hopeful the Fed cuts rates to zero, but they are not getting that.
- Aug 2026 - Ed Yardeni said he warned the Fed that bond vigilantes would not be happy with their actions, and indeed the bond yield rose 100 basis points.
- Aug 2026 - Jared Dillian said the Fed’s decision to hold rates was intentional, expecting the curve to steepen over the next 6-12 months, with Fed funds falling to 3% while the long end stays high.
- Aug 2026 - David Rosenberg said he doesn’t think the Fed will be raising rates at all, leaning to the view that their next move will be to cut rates; Jack Farley said they’re obviously not going to cut, with high confidence they won’t hike either, and that when you get those two happening, that’s literally debt monetization.
Where it appears in the record
Every line below is attributed to a named speaker.
Market pricing shifted from 2.5 Fed rate cuts to a 50/50 chance of a rate hike within 70 days of the war starting, a swing of roughly three Fed moves.
“The day before the war, the market was pricing two and a half rate cuts for this year. Today, as we as we record, it is pricing 50/50 that there would be a rate hike this year. So, we've moved basically three Fed moves from two and a half rate cuts to half a rate hike in 70 days during the war.”Jim Bianco · 20 May 2026
The Fed's 2024 rate cut caused bond yields to rise 100 basis points, the opposite of what conventional wisdom predicts, as bond vigilantes disapproved of the move.
“I said, I don't think the bond vigilantes are going to be happy with what you're doing. And sure enough, the bond yield went up 100 basis points.”Ed Yardeni · 7 Aug 2026
Ed Yardeni on the Fed's 2024 rate cut being opposed by bond vigilantes.
“I said, I don't think the bond vigilantes are going to be happy with what you're doing. And sure enough, the bond yield went up 100 basis points.”Ed Yardeni · 7 Aug 2026
The most recent Fed meeting had the most dissents since 1992, signaling unusual internal disagreement at the FOMC.
“This was the first Fed meeting since 1992 with this many dissents.”Jack Farley · 30 Apr 2026
Jim Bianco on the structural break in how the Fed operates under persistent political pressure.
“Everybody at the Fed because of the incessant attacks by Trump on the Fed is now said that they're independent. They're going to assess the economy and inflation and they're going to vote as they see fit. They're not going to wait for the chairman to tell them how to vote. That's the way it's worked for 40 years. Doesn't work that way anymore.”Jim Bianco · 28 Jul 2026
Michael Howell's base case is that the Fed's next move is a rate hike, not a cut, a direct inversion of prevailing market consensus.
“I'm my view is 100% that it's going to be a rate hike.”Michael Howell · 13 Aug 2026
Trump's attacks on the Fed have paradoxically made FOMC members more independently minded, breaking a 40-year norm where the chairman effectively directed member votes.
“Everybody at the Fed because of the incessant attacks by Trump on the Fed is now said that they're independent. They're going to assess the economy and inflation and they're going to vote as they see fit. They're not going to wait for the chairman to tell them how to vote. That's the way it's worked for 40 years. Doesn't work that way anymore.”Jim Bianco · 28 Jul 2026
AI capital spending by big tech drains money from treasury departments (previously parked in financial markets) into the real economy, causing the liquidity cycle to roll over without any Fed tightening.
“It's not because the Fed is tightening rather you know far from it the Fed's been pretty generous here into the markets it's happening because the US economy is on a roll and there's a giant sucking sound as money is being drawn out of financial markets. I mean, just think, you know, this AI spend that's going on by the big tech companies. I mean, where have they been getting the money from? They've been taking it out of their treasury departments. And where was that previously? It was in the financial system. So, it's being drawn out and it's being spent in the real economy.”Michael Howell · 3 Jun 2026
Jack Farley explains that Treasury buying back long-dated bonds while the Fed absorbs the resulting T-bill supply constitutes a coordinated debt monetization loop, not separate independent actions.
“When you get those two happening, what that's literally debt monetization.”Jack Farley · 20 Aug 2026
Luke Gromen on the Fed being boxed in by fiscal conditions in 2026.
“The fiscal situation suggests he can't hike rates this year. Full stop.”Luke Gromen · 28 Jul 2026