Morning Macro 26th August 2025
Full pressure on the Fed! Trump has fired Governor Lisa Cook for alleged mortgage fraud. Cook refused to resign and said Trump “has no authority” to fire her. Getting messy… time to hire lawyers.
Yields rise on US treasury bonds today, with 10-year yield back above 4.3%. The yield curve has steepened with the 30-year up to over 4.93%. The 2s10s (10 year – 2 year yield) now above 60 for first time since April market meltdown. 2s20s exceeding 120! (Figure 1)
But the steepening is largely driven by the front, as the 2 year yield sold off 10 bps on Powell’s Jackson Hole speech and remains depressed at 3.7% today (Figure 2). Bets on Fed cuts are coming off, though, as OIS now pricing 20.5 for September FOMC, but still 2 full cuts priced by year end. Meanwhile, Japan 30-year government yield exceeds 3.2% for the first time ever!
Dollar has rallied, and DXY index is now near unchanged from before Jackson Hole, at 98.38 points. Trump insists he paid nothing to buy 10% stake in Intel because the move converts government grants into an equity hold. But he needs money somewhere and threatened tariffs on countries that charge “discriminate against” US tech companies. South Korea committed to $150 billion in US investments, plus a non-binding agreement for $350 billion investment funds.
German IFO current conditions slightly weaker than expected at 86.4, but expectations beat consensus at 91.6 – the measure has now been rising every month since April.
How much confidence in France? PM Bayrou called a confidence vote next month. Major political fragmentation as opposition on both sides said they will vote against the motion. Michel Barnier only lasted 90 days as PM and Bayrou has only been there since December.
Bitcoin breaks $110k support level. Next key support $110k. (Figure 3)
Data today: US durable goods orders, House price index, CB Consumer Confidence.
