#federal-reserve

#federal-reserve

Federal Reserve Governor Christopher Waller says the central bank is entering a "new era" in payments - one that openly embraces decentralized finance (DeFi), distributed ledgers, and digital asset innovation as part of the mainstream financial system. Speaking Tuesday at the Fed's first-ever Payments Innovation Conference in Washington, Waller said the central bank intends to play an "active role" in the crypto revolution transforming the global payments landscape.

S&P 500 futures rose 0.27% this morning, premarket, with indexes in Asia and Europe also broadly rising as traders savored strong economic growth in China, a new "pro-stimulus" government in Japan, and the prospect that President Trump may not be in a position to impose 100% tariffs on Beijing starting November 1. Investors are also increasingly convinced that the Fed's next rate cut is locked in.

Federal Reserve Chair Jerome Powell recently addressed the National Association for Business Economics conference, indicating that the central bank would not intervene in secondary mortgage markets to ease mortgage rates, contrary to some suggestions for boosting homebuyer affordability. The discussion revolved around the Fed's efforts to reduce its significant holdings of securities, notably mortgage-backed securities (MBS), accumulated during the COVID-19 pandemic through quantitative easing measures.

Bessent disclosed that he's trimmed the initial list of 11 candidates he interviewed to five, while also clarifying that he will not be the next chair. He declined to say whether supporting lower interest rates was a requirement, noting instead that he looks for a candidate with an open mind.

The US Treasury's gold reserves have surpassed $1 trillion in value - more than 90 times what's stated on the government's balance sheet - as the precious metal breaks new all-time highs. The world's biggest gold stash passed the milestone after prices rose above $3,824.50 an ounce on Monday, in a 45% rally this year. Its official value, however, based on the $42.22-an-ounce price set by Congress in 1973, is fixed at just over $11 billion.

The Commerce Department reported Friday that its personal consumption expenditures (PCE) price index was up 2.7% in August from a year earlier, a tick higher from a 2.6% year-over-year increase in July and most since February. Excluding volatile food and energy prices, so-called core PCE inflation showed a 2.9% increase in prices from August 2024, the same as in July. The increases were what forecasters had expected.

U.S. Federal Reserve Chairman Jerome Powell gave a speech in Rhode Island yesterday and, afterwards, was asked whether the Fed was keeping an eye on the markets. His reply contained six words that investors didn't want to hear: "Equity prices are fairly highly valued." The S&P 500 lost 0.55% on the day. Markets in the U.K. and Europe are all down this morning. The picture is mixed: Asia largely had a good day and U.S. futures are marginally up, so it's not a tsunami.

In relatively calm Asian trading, the USD/JPY pair is hovering around 147.95 after retreating to 147.60- a decline that was less surprising than it was a reflection of the intersection between two opposing monetary policy paths in the United States and Japan. On the one hand, the U.S. Federal Reserve, led by Jerome Powell, sent clear signals that the slowdown in the labour market has become a higher priority than persistent inflation, which was reflected in a rate cut last week.

Silver hit fresh record highs on Tuesday, as safe-haven demand and bullish industrial fundamentals continued to support prices. The rally follows last week's 25 bps Federal Reserve rate cut, its first of the year, which prompted markets to fully price in nearly two more reductions by year-end. However, yesterday several Fed officials adopted a cautious tone, warning of persistent inflation and narrowing room for further easing, which could limit silver's bullish run.

President Donald Trump could be close to taking over the Federal Reserve. On September 9, a federal district judge blocked Trump's effort to remove Lisa Cook as a Federal Reserve governor; on Thursday, the administration petitioned the Supreme Court to allow the firing to go through. If the high court ends up siding with the administration, then Trump will have a clear path to filling the central bank with loyalists willing to vote the way he directs them to.