US: Trumping the Fed – Rabobank

According to Philip Marey, Senior US Strategist at Rabobank, US President Trump is ‘very, very close’ to nominating the next Fed Chair and while it is still unclear who will be the next Fed chair, the information available suggests that Warsh and Taylor are hawkish candidates who are likely to cause the strongest bearish flattening in the yield curve. Powell, Yellen, and Cohn could cause some bullish steepening in the short run, followed by modest bearish flattening in the long run in case of Powell and Yellen, and possibly in case of Cohn as well, he further adds.    

Key Quotes

“Warsh and Taylor are hawkish on policy rates, and likely to cause strong bearish flattening of the yield curve.” 

“In contrast, Powell, Yellen, and Cohn are dovish on policy rates, and likely to cause bullish steepening in the short term, followed by modest bearish flattening in the long run.” 

“In contrast to Yellen, Warsh and Taylor are skeptical of QE. Powell takes a centrist position.”

“Warsh, Taylor, and Cohn favor deregulation. In contrast, Yellen wants to keep most of the current regulation. Powell takes an intermediate position.”