FED: Chair Candidate Hassett: Fed Board Should Return To Greenspan's Approach
National Economic Council director Kevin Hassett tells Fox Business that Treasury Secretary Bessent is leading the search for the next Fed Chair. He says of his own candidacy, which was mentioned by President Trump on Tuesday, that "if there's a future challenge that comes my way, I'd be happy to talk to [Trump] about it." He reiterates that he thinks the Fed should be easing amid "low" inflation and the recent "negative news on unemployment". Intriguingly he suggests that his philosophy of running the Board/FOMC would be more like the way Alan Greenspan (Fed Chair between 1987-2006) ran things. In other words, a more autocratic style of steering consensus, and one Hassett says would be less "partisan" in setting policy than the current Board.
- He acknowledges that the latest employment data is weak, and suggests that provides grounds to cut rates: "inflation right now is the lowest that it's been in over five years, and we just had some negative news on unemployment... And so the fact that the Fed hasn't moved against, like, really obvious data that would suggest that they should, is troubling."
- On the new Bureau of Labor Statistics head: "President Trump has no desire to hire people that are going to give him the numbers that he likes... we've got a number of candidates that everybody trusts, that's going to go in and try to put a second set of eyes on why these numbers have become so unreliable."
- He's asked about fellow Chair candidate Kevin Warsh's comment that the Federal Reserve requires "regime change", and says he agrees, pointing to what he says is its partisanship. He says "I think that the highest priority for the President, as with the BLS, is that the Fed be independent, it be data driven, it be transparent, and it make moves that are right for the American people, not necessarily the moves that are right for one party or the other. And I think that if you look at the pattern of the Fed movements over the last few years, you could wonder were they putting politics ahead of their mandate, you know, cutting rates right before the election for Kamala Harris and so on. And I'm sure that the President's candidates are going to be a lot different than what you've seen over the last couple years.... we've got a board now where the Democrats seem to be voting one way and the Republicans are voting another way."
- "The Fed is supposed to be a nonpartisan board that focuses on its dual mandates of unemployment and inflation, and when you've got a partisan divide that's really historically unprecedented, then you know that the leadership has failed. The job of the leadership is to drive a nonpartisan consensus at the board, and that's not what we're seeing right now. And so, of course, the board is going to have to change and the board is going to have to go back to the Alan Greenspan approach of driving consensus, having healthy debate, and if there's a move that looks like it might be interpreted as partisan then you become less likely to do it." we look back at Fed moves and found that they tended to not move right before election, because they didn't want to have the appearance of doing something to try to put their figure on the scale of the election, but then we've got these guys who are willing to do that. This is the kind of thing that has to change. I think Kevin Warsh is right about regime change."
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GLOBAL POLITICAL RISK: Week Ahead 7-13 July
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(MNI) London – All timings are subject to change.
Monday 7 July:
- BRICS: The BRICS leaders’ summit concludes in Rio de Janeiro, Brazil. The summit has been notable due to the absence of two of its most high-profile leaders, Chinese President Xi Jinping and Russian President Vladimir Putin. A joint declaration signed over the weekend decried the airstrikes on Iran and the escalation in tariffs, but did not directly criticise either the US or Israel. The summit marked the first for Indonesia as a full member of the BRICS group, while 10 more (Belarus, Bolivia, Kazakhstan, Cuba, Nigeria, Malaysia, Thailand, Vietnam, Uganda, and Uzbekistan) attended as partner countries.
- US-Israel: Israeli PM Benjamin Netanyahu visits the White House for a meeting with US President Donald Trump. While acting as something of a ‘victory lap’ following the ’12-Day War’ with Iran, the meeting will come as a chance for Trump to press an immediate ceasefire in Gaza on the Israeli PM. Trump has talked about being “very firm” with Netanyahu on halting the conflict. Israel and Hamas failed to reach an agreement in the first round of indirect talks on 6 July. Newsweek reports that rather than formal talks in the Oval Office, the meeting will take the form of a dinner at 18:30ET (07:30JST, 23:30BST) that is closed to reporters.
ECB: ECB Speak Wrap (June 24 – July 7)
The ECB’s annual forum in Sintra, Portugal was held last week, and as usual provided a platform for several Governing Council members to share views around current monetary policy. Amid the noise, the MNI Policy Team’s latest sources piece nicely summarised the mood within the ECB: Officials are virtually unanimous that their June projections are so far being confirmed by incoming data, despite ongoing risks from global trade tensions, paving the way to a likely September cut, though some more cautious policymakers would prefer to wait until December.
- A reminder that the June macroeconomic projections were based on a market curve which embedded one more 25bp cut this cycle, with markets now focused on (1) the timing of this likely cut and (2) the scope for a terminal rate below 1.75%. A July cut appears very unlikely at this stage, with any lingering chance of such a move seemingly requiring an unexpected deterioration on the tariff/trade front.
- The most interesting thread of discussions in Sintra was on the exchange rate, after Vice President de Guindos surprisingly suggested a EURUSD exchange rate above 1.20 would be “complicated” for the Eurozone economy. Although de Guindos also noted that the speed of adjustment in the exchange rate, rather than the level, was most important to monitor, his comments meant that most speakers were asked to weigh in on the currency during the week.
- Belgium National Bank Governor Wunsch struck a more centrist tone than usual in his first comments since the June decision. Usually more hawkish leaning, Wunsch told MNI that “while not expressly calling for a cut myself, I can understand and see why further easing is priced in by financial markets. The risk is probably to the downside”
- Last week also saw the release of the ECB’s latest Strategy Review, and the Minutes of the June decision
USDJPY TECHS: Trades Through The 50-Day EMA
- RES 4: 148.65 High May 12 and a reversal trigger
- RES 3: 148.03 High Jun 23
- RES 2: 146.19/146.77 High Jun 24 / 76.4% of Jun 23 - Jul1 bear leg
- RES 1: 145.60 Intraday high
- PRICE: 145.56 @ 13:32 BST Jul 7
- SUP 1: 144.18/142.68 Low Jul 4 / 1
- SUP 2: 142.12 Low May 27 and a key short-term support
- SUP 3: 141.96 76.4% retracement of the Apr 22 - May 12 upleg
- SUP 4: 141.49 Low Apr 23
USDJPY has started the week on a firmer note. Price has breached the 50-day EMA, at 144.91, and a close above it would highlight a stronger reversal. This would expose 146.19, the Jun 24 high. For now, gains still appear corrective. Moving average studies are in a bear-mode position, signalling a dominant downtrend. A resumption of weakness would open 142.12, the May 27 low and a key short-term support.
