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On January 30th, Trump turned the selection process for the Federal Reserve Chair into a game show, with Kevin Warshs ultimate victory being arguably the most unexpected choice. This decision is bound to exacerbate market volatility and may displease all parties, including Trump himself. This nomination will first trigger a strong cognitive conflict on Wall Street and in policy circles. Although Trump promised to choose a Fed Chair capable of implementing loose monetary policy, Warsh has always been considered a hawk. This background will make it difficult for Warsh to build credibility. If he chooses to cut interest rates, the market will see him as abandoning principles and submitting to Trumps puppet; if he maintains high interest rates for too long, he will inevitably clash with Trump quickly, which in itself will trigger market volatility. Before Powells term ends, Warshs "shadow term" has already begun, potentially leading to confused policy signals and market misinterpretations. Intriguingly, Warshs victory seems to stem from a "survivors logic." When the Trump team lost interest in Hassett, he became the only remaining option. Until December of last year, Hassett was still the top favorite in the forecasting market, but concerns that his nomination could drive up bond term premiums, coupled with warnings from Wall Street executives that someone too close to the president should not be in charge of an independent central bank, eventually changed the situation.On January 30th, Federal Reserve Governor Waller stated that the current interest rate range is 3.50%-3.75%, and monetary policy should be closer to a neutral level, which he believes is around 3%. Despite robust economic growth, the labor market remains weak. Waller expects last years weak employment data to be revised downwards, reflecting near-zero job growth in 2025. He stated that he has heard of several companies planning layoffs in 2026, and therefore is quite skeptical about job growth, warning of a significant risk of a sharp deterioration in employment. Regarding inflation, Waller pointed out that the inflation rate excluding tariffs is close to the Feds 2% target and is on track to reach it. Although inflation has risen due to tariffs, he believes that given that inflation expectations have stabilized, monetary policy should ignore these temporary effects. Waller voted against a 25 basis point rate cut at this weeks meeting, arguing that current policy is still excessively suppressing economic activity.Federal Reserve Governor Waller: Monetary policy should be closer to a neutral level, which is likely around 3%, while the current interest rate range is 3.50%–3.75%.Federal Reserve Governor Waller: Despite robust economic growth, the labor market remains weak.Federal Reserve Governor Waller: Expects last years weak jobs data to be revised downwards to reflect near-zero job growth in 2025.

Oil Quiet As Price Cap Suggestion Assists in Relieving Supply Concerns

Skylar Williams

Nov 25, 2022 14:48

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Benchmark Brent oil declined on Thursday, while West Texas Intermediate (WTI) crude remained unchanged, hovering at two-month lows due to uncertainty about the degree to which a proposed G7 restriction on the price of Russian oil would limit supply.


A larger-than-anticipated rise in gasoline inventories in the United States and an expansion of COVID-19 limitations in China also knocked on oil prices.


At 15.15 p.m. ET (2015 GMT), Brent oil prices decreased 29 cents, or 0.3%, to $85.12 per barrel, while U.S. WTI crude futures decreased 2 cents, to $77.96 per barrel.


Due to the Thanksgiving break in the United States, trade volumes were quite low.


The announcement on Wednesday that the expected price ceiling for Russian oil may surpass the current market level triggered a decrease of about 3 percent for both benchmarks.


European Union nations remained divided over what level to cap Russian oil prices to limit Moscow's ability to pay for its battle in Ukraine without causing a global oil supply shock; if positions converge on Friday, more conversations are possible.


A European official claimed that the G7 is discussing a cap of $65-$70 per barrel for Russian oil transported by sea, but European Union member states have not yet reached an agreement on a price.


A higher price ceiling might encourage Russia to continue selling its oil, decreasing the possibility of a global oil supply shortage.


According to two sources, several Indian refiners are discounting Russian Urals crude by between $25 and $35 per barrel compared to the worldwide benchmark Brent oil. Urals is Russia's principal crude export.


Despite the obstacles, Bart Melek, global head of commodities market strategy at TD Securities, is rather optimistic about oil. "The Russian price ceiling is another aspect that contributed to the current price fall," he stated.


The Energy Information Administration (EIA) said on Wednesday that gasoline and distillate inventories in the United States climbed substantially during the previous week. [EIA/S]


In contrast, oil stockpiles decreased by 3.7 million barrels to 431.7 million barrels in the week ending November 18, despite a Reuters survey predicting a reduction of 1.1 million barrels.


China reported the highest daily number of COVID-19 cases since the outbreak began over three years ago on Wednesday. Local officials intensified measures to remove the breakouts, raising investor anxiety over the economy and demand for fuel.

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