Fed Chair Powell’s Retirement Talk
Senior US Strategist Philip Marey grabbed the spotlight when Treasury Secretary Scott Bessent chatted with Jerome Powell about his future role. On Fox Business, Bessent kept it short:
- “Nothing forces Powell to step down now—he’s got a full term till May 2026.”
- “If he wants to finish out the term, he should; if he wants to cut it short, that’s his call.”
Switching to Bloomberg, Bessent added a twist: he thinks Powell should drop out of the Fed Board once his chair stint ends. He pointed to the classic rule that when the chair steps down, they usually leave the board too. “A former chair hanging around could really throw markets off-track,” he warned.
Hell-bound irony? Bessent floated a “shadow chair” idea back in October, hoping it’d nudge Powell away. Now he’s turning it into a resignation pitch.
Impact on the Board under President Trump
- Two board seats ready to open in January 2028.
- With Adriana Kugler’s term ending Jan 2026, that’s two open spots — perfect for Trump to name loyalists.
- Historic shifts from Waller and Bowman could tilt the board toward a GOP majority.
Expectations for Rate Cuts
- FOMC may speed up cuts in 2026 after a lame-duck year.
- Only one cut predicted this year, likely in September.
Who’s the Next Fed Chair?
- Bessent said a formal process is already underway.
- He highlighted “many strong candidates” inside and outside the Fed.
- When asked about Trump’s interest in Bessent, he shrugged, “I’m part of the decision‑making process.”
Trump’s Office‑Bluff About Powell
During a high‑profile meeting with the Philippine president, Trump lashed out at Powell: “This guy keeps the rates high on purpose!” He accused Powell of playing politics – flipping rates for a dark‑horse election bid, and possibly aiding his political rivals. Trump doesn’t mince words: “Powell’s bad job is clear; he’s likely out soon.”
Fed Independence vs. Trump’s Voice
Governor Bowman glowed on CNBC, reinforcing Fed independence. She said transparency and accountability are part of that independence. Her September vote against a 50 bps rate cut might have been an over‑hawk moment, but now she’s pushing for early cuts in July—possibly triggered by Trump’s promotion to Vice Chair for Supervision last month.
ECB’s Bank Lending Survey: The Numbers in a Nutshell
- Firms’ loan demand has nudged up but still lags behind expectations.
- Consumer confidence, plus lower borrowing costs, are driving a stronger housing‑loan demand.
- Despite easing policy, business credit standards tightened a smidge because of economic uncertainty.
- Corporate loan terms eased, but margins on riskier loans rose slightly.
US‑Japan Trade Deal Highlights
- Japan faces a 15 % reciprocal tariff, far lighter than Trump’s earlier 25 % proposal.
- Japan will inject $550 billion into the U.S. economy.
- Deal opens trade for cars, trucks, rice and other ag goods.
- Potential to kick the $44 billion Alaska LNG project back to life—important for U.S. energy dominance. Japan, a top LNG buyer, has already felt the impact of Russian sanctions.
Energy Market Snapshot
Oil stays pretty much flat in the high 60s.
- TTF gas prices rallied back over €33/MWh after yesterday’s dip to €32.
- China‑U.S. talks next week might touch on Iran and Russia oil needs.