Ben and Dominique explore the incremental shifts toward greater disinflation optimism in the Fed minutes and the skepticism surrounding the Treasury’s limited options for fiscal consolidation. They analyse the minimal impact of Treasury Secretary Bessant’s doubled bond buybacks against a persistent 6% budget deficit, noting that lower yields will require genuine fiscal discipline rather than market messaging. While core PCE is expected to print at a consensus 22 basis points, focus shifts to Jackson Hole, where Chair Warsh is anticipated to maintain his strict ‘no guidance’ policy while outlining a long-term vision for Fed modernisation. Dominique notes that flat consumer spending is unlikely to alarm the Fed as long as Okun’s law remains stable and the data points at a stable unemployment rate.
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