Can war make fed rates drop low below 1%?? 😗

[Milodrink]

Can war make fed rates drop low low below 1 in SG%??

 

[Milodrink]

Singapore doesn’t use interest rates as its main tool.

 

[iduncheckmail]

great another siao lang thread.
self reply to self.

 

[coyote]

My friend sent me this snippet from some site...

即将上任的美联储主席叫凯文·沃什。如你所知，特朗普希望降息，但是目前美国通胀就是偏高，所以不可能降息，如果在通胀偏高的前提下降息？

凯文·沃什表示，我们美联储肯定是独立的，通胀高当然不能降息，但是……我觉得要重新定义通胀。现在的通胀计算方式是主要参考核心PCE，也就是剔除了食品和能源，但是我认为这种方式已经过时。

凯文·沃什主张，现在不是说要剔除什么，而是先要把当月变化最大的两头给砍了， 也就是最高和最低，不管是什么，直接砍了，而不是像过去一样只剔食品和能源。

然后，如果某个月因为关税或者战争导致油价上涨，车价上涨，那么直接采取截尾均值会直接把这些“噪音”切掉。也就是说，权当这些上涨不存在。原因很简单：虽然它们看起来上涨了，但是实际上底层通胀已经平稳，这些上涨只不过是战争或者关税引发的，看起来上涨，实际上没涨。

为什么这么说呢？因为地缘政治比如战争，或者政策调整比如关税，引发的物价上涨，这已经不是上涨了，不受货币政策控制的供应侧冲击的影响。

只要通胀不是因为货币政策导致的，那么可以全部切掉，权当通胀不存在。
你每次看到货架上涨价， 那只是你的幻觉。
所以你不要老觉得有通胀了，你七切八切的，说不定美国还通缩呢。

 

[randyap]

Should be happy it never pass 3%. Through history 10% is not impossible.

 

[Milodrink]

My friend sent me this snippet from some site...

即将上任的美联储主席叫凯文·沃什。如你所知，特朗普希望降息，但是目前美国通胀就是偏高，所以不可能降息，如果在通胀偏高的前提下降息？

凯文·沃什表示，我们美联储肯定是独立的，通胀高当然不能降息，但是……我觉得要重新定义通胀。现在的通胀计算方式是主要参考核心PCE，也就是剔除了食品和能源，但是我认为这种方式已经过时。

凯文·沃什主张，现在不是说要剔除什么，而是先要把当月变化最大的两头给砍了， 也就是最高和最低，不管是什么，直接砍了，而不是像过去一样只剔食品和能源。

然后，如果某个月因为关税或者战争导致油价上涨，车价上涨，那么直接采取截尾均值会直接把这些“噪音”切掉。也就是说，权当这些上涨不存在。原因很简单：虽然它们看起来上涨了，但是实际上底层通胀已经平稳，这些上涨只不过是战争或者关税引发的，看起来上涨，实际上没涨。

为什么这么说呢？因为地缘政治比如战争，或者政策调整比如关税，引发的物价上涨，这已经不是上涨了，不受货币政策控制的供应侧冲击的影响。

只要通胀不是因为货币政策导致的，那么可以全部切掉，权当通胀不存在。
你每次看到货架上涨价， 那只是你的幻觉。
所以你不要老觉得有通胀了，你七切八切的，说不定美国还通缩呢。

Jin chim sia

 

[coyote]

Jin chim sia

Just use Gemini to translate

The incoming Fed Chair is Kevin Warsh. As you know, Trump wants rate cuts, but currently, US inflation remains high, making a cut seemingly impossible. So, what happens if rates are cut while inflation is still elevated?
Kevin Warsh states: "We at the Fed are certainly independent. Naturally, we can't cut rates when inflation is high, but... I believe we need to redefine inflation." He argues that the current method—which primarily references Core PCE (excluding food and energy)—is outdated.
Warsh advocates that instead of picking specific categories to exclude, we should simply lop off the two extreme ends of monthly price changes—the highest and the lowest—regardless of what they are. This is a departure from the traditional focus on just food and energy.
Under this logic, if oil or car prices spike in a given month due to tariffs or war, applying a "trimmed mean" would directly cut out these "noises." In other words, one would act as if these price hikes simply don't exist. The reasoning is simple: even though prices appear to be rising, underlying inflation has stabilized. These spikes are merely supply-side shocks triggered by war or tariffs; they look like inflation, but technically, they aren't.
Why? Because price increases driven by geopolitics (like war) or policy shifts (like tariffs) are no longer considered "inflation" in the traditional sense; they are supply-side shocks beyond the control of monetary policy.
As long as inflation isn't caused by monetary policy, you can slice it all away and pretend it doesn't exist.
Every time you see prices rising on the shelves, it’s just an illusion.
So, don't stay stuck on the idea that there's inflation—once you slice this and trim that, the US might actually be in a state of deflation.


Now you know why Trump chosen this guy.

 

[Visor9999]

Can war make fed rates drop low low below 1 in SG%??

Possible as Kevin warsh plan is to cut interest rates asap

 

[Milodrink]

Just use Gemini to translate

The incoming Fed Chair is Kevin Warsh. As you know, Trump wants rate cuts, but currently, US inflation remains high, making a cut seemingly impossible. So, what happens if rates are cut while inflation is still elevated?
Kevin Warsh states: "We at the Fed are certainly independent. Naturally, we can't cut rates when inflation is high, but... I believe we need to redefine inflation." He argues that the current method—which primarily references Core PCE (excluding food and energy)—is outdated.
Warsh advocates that instead of picking specific categories to exclude, we should simply lop off the two extreme ends of monthly price changes—the highest and the lowest—regardless of what they are. This is a departure from the traditional focus on just food and energy.
Under this logic, if oil or car prices spike in a given month due to tariffs or war, applying a "trimmed mean" would directly cut out these "noises." In other words, one would act as if these price hikes simply don't exist. The reasoning is simple: even though prices appear to be rising, underlying inflation has stabilized. These spikes are merely supply-side shocks triggered by war or tariffs; they look like inflation, but technically, they aren't.
Why? Because price increases driven by geopolitics (like war) or policy shifts (like tariffs) are no longer considered "inflation" in the traditional sense; they are supply-side shocks beyond the control of monetary policy.
As long as inflation isn't caused by monetary policy, you can slice it all away and pretend it doesn't exist.
Every time you see prices rising on the shelves, it’s just an illusion.
So, don't stay stuck on the idea that there's inflation—once you slice this and trim that, the US might actually be in a state of deflation.


Now you know why Trump chosen this guy.

Still jin chim eh.

Lol 99% here won't get it deh

WOT

 

[coyote]

Still jin chim eh.

Lol 99% here won't get it deh

WOT

Since my English is not good anyway, let me rewrite and pretty sure you all can understand better...

He's saying if the inflation is caused by tariffs or war, these are, as he coined "supply side shocks", not baseline inflation and should be excluded from the inflation calculation. Basically finding ways to rationalize rate cuts.

 

[Milodrink]

Since my English is not good anyway, let me rewrite and pretty sure you all can understand better...

He's saying if the inflation is caused by tariffs or war, these are, as he coined "supply side shocks", not baseline inflation and should be excluded from the inflation calculation. Basically finding ways to rationalize rate cuts.

This u mean

 

[Shiny Things]

Can war make fed rates drop low low below 1 in SG%??

Short answer: no.
Long answer: hell no.

Long long answer: even though inflation at the moment is mostly driven by energy prices, and the Fed prefers to look through short-term price level shocks, there just aren't any votes on the Fed for a cut right now (well, maybe Miran, but Miran plus Warsh plus three dollars gets you a cup of coffee).

And if the Fed isn't going to cut, then it's hard to see Singaporean rates going much lower either. The SGD year bill is already trading 230bps rich to the 1yr US treasury bill, so it's hard to imagine where even more cash would come from to push SGD yields even lower.

 

[singaporean11]

Short answer: no.
Long answer: hell no.

Long long answer: even though inflation at the moment is mostly driven by energy prices, and the Fed prefers to look through short-term price level shocks, there just aren't any votes on the Fed for a cut right now (well, maybe Miran, but Miran plus Warsh plus three dollars gets you a cup of coffee).

And if the Fed isn't going to cut, then it's hard to see Singaporean rates going much lower either. The SGD year bill is already trading 230bps rich to the 1yr US treasury bill, so it's hard to imagine where even more cash would come from to push SGD yields even lower.

I am going to bet that Kevin Warsh will ensure that Trump get his wish, i.e. continual cut of Fed rate once he take over as Fed Chief until very low rate in next 2 years (most likely below 1%)...
No hurry for Singaporeans to lock in at current property loan interest rate now (just to see it continue to drop)...

 

[Shiny Things]

I am going to bet that Kevin Warsh will ensure that Trump get his wish, i.e. continual cut of Fed rate once he take over as Fed Chief until very low rate in next 2 years (most likely below 1%)...

Kevin Warsh can't just say "we're cutting rates" and expect it to happen. For those cuts to happen, you need seven votes on the FOMC.

Walk me through your thinking. Absent a big slowdown in the economy (which is not what you're arguing, you're saying that Warsh will be able to strong-arm the Fed into cutting), which seven are going to vote for a cut?

Spoiler

It won't happen. I'll give you Warsh, (edited to remove Miran, because Warsh is taking Miran's seat) and maybe even Waller and Bowman. But on the other side, you've got Kashkari, Hammack, and Logan all dissenting last meeting in favor of a neutral-to-hiking bias; Barr and Cook are both on record saying the risks are tilted toward hikes; and Powell's still a voter and he's not going to go along with Warsh.

That gets you six hawks and three doves, and I don't like your odds of getting to seven doves from there.

That said, if you wanna put your money where your mouth is, Jun '28 (2-year) SOFR futures are pricing in absolutely zero change in rates from where we're at today. If you buy those, and rates go to 1%, you'll make like $6500 per contract. Gonna do it?

 

[BBCWatcher]

Kevin Warsh can't just say "we're cutting rates" and expect it to happen. For those cuts to happen, you need seven votes on the FOMC.

The only acute near-term risk to Fed independence that I can think of is if the Supreme Court decides Trump v. Cook in a surprising way.

Fed independence would be better protected at least into the medium term if the Senate flips.

 

[lzydata]

I thought Warsh is going to take Miran's seat so there will be one vote to cut no matter what, at most?

 

[Shiny Things]

I thought Warsh is going to take Miran's seat so there will be one vote to cut no matter what, at most?

Oh yeah - you're right! Updated my post.

 

[Milodrink]

I am going to bet that Kevin Warsh will ensure that Trump get his wish, i.e. continual cut of Fed rate once he take over as Fed Chief until very low rate in next 2 years (most likely below 1%)...
No hurry for Singaporeans to lock in at current property loan interest rate now (just to see it continue to drop)...

Now got a very big breaking news online.

Basically about saying Warsh gona cancel mortgage. Dk what's the story and essence.

So mean sg rates will drop until 0.5 or 0% or not

 

[highsulphur]

Can war make fed rates drop low low below 1 in SG%??

Should be the other way

 

[singaporean11]

Should be the other way

I will bet that as long as Trump is still US President, fed rates will drop low low below 1% regardless of what happened...

If based on standard economic theory, then Powell should never have reduced Fed rate when Biden was President when US inflation was already so high at that time... Yap, it is all about "politics" nowadays!