Ted Darling

August 27, 2024: Larry Page, Google co-founder on the AI race: "I'm willing to go bankrupt rather than lose this race."

The Federal Reserve held interest rates steady today, and we think patience is the right approach. Inflation remains high, but the question isn't simply whether rates should go higher. It's whether higher rates would actually address the inflation that remains. The challenge is that parts of the economy, and of inflation itself, are moving at very different speeds. Growth remains remarkably resilient in aggregate, supported by a powerful investment cycle, but beneath the surface, parts of the economy that are more sensitive to borrowing costs are feeling considerably more restraint. We see a similar divergence in inflation. Many of the cyclical components that respond to higher interest rates appear relatively well controlled. Meanwhile, persistent pressures across energy, insurance, healthcare and education are unlikely to be meaningfully affected by another 25-basis-point rate increase. In some ways, the Fed is operating a house with one thermostat, but very different temperatures in every room. Turning it down further may make the rooms that are already cool even colder, without doing much to cool those that remain hot. That doesn't mean the Fed should become complacent. Inflation is still above its 2% objective and the Fed should retain the option to tighten further if the underlying inflation trend deteriorates. But hawkish rhetoric and patient policy can comfortably coexist, particularly when the bond market has already done some tightening of its own through higher Treasury yields. For investors, we think this environment argues for humility rather than making a heroic directional call on rates. Real yields remain attractive, and there's considerable income available across high-quality fixed income markets. We continue to favor a moderate duration posture, taking advantage of today's income opportunities while remaining patient as this unusually divergent economy evolves. The Fed doesn't need to ignore the heat. It just needs to be thoughtful about where it's coming from.

Mr. Chairman, Brent from FinTwit television. "Do you have any idea how stupid you sound?"

Let’s see how bonds react to a Fed that is clearly not committed to 2% inflation

The Fed holds steady. The decision is 10-2. Lisa Cook and Beth Hammack voted for an increase.

On October 28, the #GDPNow model nowcast of real GDP growth in Q3 2026 is 3.3%: bit.ly/32EYojR. #ATLFedResearch Download our EconomyNow app or go to our website for the latest GDPNow nowcast: atlfed.org/46BOWkD.

Bank of Canada raises the policy rate by 25 basis points to 2½% bit.ly/4iJvsBc #economy #cdnecon

This was posted in this mornings Institutional Investor report:

I understand that the market is expecting a hawkish pause from the FOMC, but my view is Warsh risks credibility in doing so. Here is what he has said by date: July 14, 2026: “And we share a resolute commitment to restoring price stability.” August 28, 2026: “Price stability is not self-executing, nor is inflation necessarily mean-reverting. It is the Fed’s job to deliver stable prices.” September 16, 2026: “Today’s policy action will support a timelier return to the Committee’s 2 percent goal. This Committee will deliver price stability.” September 16, 2026: “shows our resolve to achieve price stability on a timelier basis.” October 16, 2026: “We made very clear that we would deliver price stability, and we removed a dose of accommodation about a month ago.”