come in and argue – i bet there will be no cut, but probably hike

The Jackson Hole Speech

1. many says Powell's specch at Jackson indicates rate cuts comming. I do not think that is a fair understanding of the speech.

2. Powell noted in the speech, that there is a cut of job opening growth, but at the same time, there is a cut in labour supply growth (because of immigration policy).

3. So he said there is a downside risk in the labour market. But in the speech itself, he did not indicate that an imminent cut is necessary.

4. rather, he maintained that inflation and price remains in great uncertainity.

5. The most dovish tone in his speech is that fed circumstances may warrant a change of policy. cutting is not mentioned.

Deficit and Long Bond Yield Problem

1. Check the dollar strength following the last 3 interest cuts, and the change in 20 and 30 years yield, you see that after the first cut, the yield did drop a bit, after the second cut, there came volatility, after the third cut and 2025 started, the 20 and 30 years yield rose continuously up to now.

2. So i bet smart money's major concern is the deficit issue, rather than the short rate. To address the rising yields (and thus lower the US gov.'s borrowing cost), a solid and realistic long-term policy on cutting deficit could be far more welcomed by the market, than rate cut.

3. For point 1 above, it was bloomberg's report also in January this year that there had been shift from long term treasuries into corporate and junks. Bond guys simply prefer the higher yields and did not like treasuries volatility.

The Latest S&P PMI Report

1. The report actually suggest in this comments that the circumstances (PMI DATA) appear to need a rate hike rather than rate cut. See the last paragraph in the comment section.

BE WARNED: I AM NOT A PROFESSIONAL IN THIS MATTER. THIS IS NOT AN INVESTMENT ADVICE.