TechFlow News, January 30: According to JIN10 Data, market reactions to the potential nomination of Waller are summarized below:
- Mizuho Securities: If Waller is confirmed, markets will face sustained pressure for rate cuts. Markets have misjudged the pace of easing—the Fed’s rate-cutting pace will likely be slower than what markets expect or hope for.
- Wilson Asset Management: Waller’s inclination toward rate cuts conditional on balance sheet reduction may trigger market fears of liquidity contraction, leading to sell-offs in hedge assets such as gold, cryptocurrencies, and bonds.
- National Australia Bank (NAB): Waller’s confirmation would reinforce expectations that the Fed’s independence will be preserved—indicating the Fed will not become subservient to Trump or any other president’s agenda.
- TD Securities: If Waller is smoothly confirmed as the next Fed Chair, U.S. Treasury yield curves are expected to steepen. However, any market reaction will likely be short-lived, as the new chair must first persuade other members of the Federal Open Market Committee (FOMC).
- Commonwealth Bank of Australia (CBA): Markets are already familiar with Waller, which may help stabilize sentiment to some extent. He is more of a “steady, reliable operator” rather than a radical reformer.
- Carson Group: Waller has historically been a hawk; if he enters the Fed advocating aggressive rate cuts, he may lack credibility internally. We could even face a deeply divided Fed that refrains from cutting rates altogether.
- L&G Investment Management: Whoever Trump nominates will likely be more dovish than Powell. Although markets have already priced in future Fed rate cuts and dollar weakness, longer-term yields may rise due to higher risk premiums—cautioning against a “buy the rumor, sell the fact” reversal.
Latest institutional rate-cut expectations
- MUFG: Downgraded its forecast for the number of Fed rate cuts this year and now expects the first cut in April.
- China International Capital Corporation (CICC): The Fed may still cut rates twice in 2026, but the first cut could be delayed until Q2.
- Goldman Sachs: Preliminarily expects the Fed’s next 25-basis-point cut in June, followed by the final cut of this cycle in September.
- Danske Bank: Following the Fed’s January policy decision, the risk of another pivot toward monetary easing is rising; rate cuts are expected at both the March and June meetings.
- Commerzbank: Given the currently more favorable economic and labor market conditions, the Fed will not rush to cut rates. It is unlikely the Fed will cut again before Powell’s term ends.
- Huatai Securities: The Fed’s January meeting reinforced our more optimistic view of the U.S. economy and labor market. We maintain our expectation that the Fed will pause rate cuts from January through May, with 1–2 additional cuts occurring after the new chair takes office mid-year.
- CITIC Securities: Powell has shifted his expectation for peak tariff-driven inflation from Q1 to mid-year and remains uncertain about new tariff policies. We therefore expect no further rate cuts during Powell’s remaining two meetings as chair.
- SEB: Although Powell maintains rate-cut expectations, he emphasized the need to wait for tariff-related inflationary effects to dissipate—unless the labor market deteriorates significantly—posing upside risks to our forecast of three rate cuts this year (first in March).
