The global bond rout is deepening, with the 10-year Treasury note hitting another worrisome milestone. The sell-off is gaining pace despite inflation data released on Wednesday that could take some pressure off the Fed. But concerns about the central bank’s independence are again in focus after President Trump renewed his attacks on Jay Powell, the former central bank chair who still sits on its board of governors.
A new report by an independent inspector general appears to exonerate Powell and his colleagues for cost overruns at the Fed’s headquarters. But Trump doesn’t seem to see it that way. The latest: The turmoil comes despite a decent inflation report.
The Personal Consumption Expenditures index, the Fed’s preferred inflation measure, showed that core inflation — which strips out volatile moves in food and energy items — was below economists’ forecasts in August. Bond yields fell and traders dialed back odds that the Fed would need to raise interest rates later this month to tame inflation. But changes to how P.
C. E. data is calculated may be glossing over price pressure. “The Fed will likely see the August P. C.
E. report as a glass half empty. They want inflation to move lower because price pressures are easing, not because the way it’s measured changes,” Bill Adams, the chief U.S. economist at Fifth Third Commercial Bank, wrote to investors. He believes that the Fed may still need to raise rates this month and in December.
Such a scenario would most likely draw the ire of Trump, who has been pushing for lower rates. But his attention on Wednesday was on the release of a report by a Fed watchdog on a nearly $2.5 billion renovation project at the central bank’s headquarters. What the report found: no evidence that Powell or his colleagues were guilty of illegal behavior or administrative misconduct.
The inspector general also acknowledged that no referrals were made to the U.S. attorney general. In a letter, Kevin Warsh, whom Trump picked for chairman, welcomed the report’s findings. But Trump doesn’t seem to want to drop the matter.
On social media, Trump said Powell should be “forced to resign.” If Powell doesn’t step down, he should be sued, the president added. Trump also said that he had asked Todd Blanche, the attorney general, to look into the report’s findings. A reminder: The president would face a high legal bar if he tried to remove a Fed official.
HERE’S WHAT’S HAPPENING Democrats block a Republican effort to limit, but not ban, congressional stock trading. A leading Senate Democrat called the measure, the Stop Insider Trading Act, a “toothless” bill that doesn’t fully prohibit trading by lawmakers and places no restrictions on the president or the vice president. The House passed the legislation in July.
The move denied Republicans a chance to claim progress on an issue concerning voters. Paramount’s buyout of Warner Bros. Discovery prompts C.
E. O. changes. The Mattel chief who helped turn Barbie into a blockbuster movie, Ynon Kreiz, was named as a C.
E. O. of the new entertainment giant, alongside David Ellison. The announcement came soon after a judge approved the settlement of an antitrust lawsuit against Paramount filed by a group of states.
Mattel in turn named Roger Lynch, the head of Condé Nast, as its new C. E. O.
Defense Secretary Pete H...
Source: New York Times Business · Summarized by HeadlinesBriefing