The financial markets expect interest rates to remain higher for longer, notwithstanding President Trump's demands that Kevin Warsh, newly instated as Fed chief, get rates down. But the macroeconomic backdrop no longer supports an easing bias, let alone a rate cut. Paradoxically, Elias and Ed explain, a more hawkish Warsh than investors expect would actually work in Trump's favor via its downward effect on long-term Treasury yields. … We expect the Fed to hold rates unchanged at its June meeting, shifting to a tightening policy stance, followed by a rate hike in July. … Also: Two recent Fed reports confirm consumers' resilience.
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