Markets Expect 25 bp Cut as FOMC Begins Tomorrow

Yields generally decline as positive US-China news is announced. Treasury yields grinded higher overnight after US and Chinese officials indicated that trade deal negotiations have progressed and Trump expressed further optimism. Yields gradually declined over the remainder of the session, with the 2-year yield ending 1bp higher at 3.49% and the 30-year yield declining 4 bps to 4.55%. Meanwhile, equities rallied today on the positive US-China trade news, with the S&P 500 and NASDAQ ending 1.23% and 1.86% higher, respectively.

Bessent Announces Five Names for Fed Chair. Treasury Secretary Scott Bessent released the names of his candidates for Fed Chair. Those still under consideration are current Fed Governors Christopher Waller and Michelle Bowman, former Fed Governor Kevin Warsh, National Economic Council Director Kevin Hasset, and BlackRock executive Rick Rieder, all of whom have been previously reported to be in the running for the job. Bessent said he would do one more round of interviews before presenting his list to the White House after Thanksgiving, and President Trump told reporters that he plans to make his pick by the end of the year. Trump then went on to criticize current Fed Chair Jerome Powell for not easing policy as aggressively as he would like. Powell, whose Chairmanship ends in May, has not indicated whether he will then step down or serve out his underlying Governor term, which runs until 2028. The next Chair will have to balance Trump’s calls for aggressive rate cuts while also maintaining investor confidence in an environment where inflation has held consistently above the Fed’s 2% target.

Argentina President Javier Milei secures midterm vote. President Javier Milei’s libertarian party saw strong wins in Sunday’s midterm elections as Milei secured 41% of votes nationwide compared to the opposition party’s 32%. In his victory speech, Milei noted that he now has the support of 101 lower house members and 20 senators, which pushes him past the one-third threshold needed in the lower house to protect his veto power and pursue other nation-wide reforms to restore the economy. The victory also comes as Treasury Secretary Scott Bessent’s partnership with Argentina hinged on Milei’s future leadership, with the two countries just last week signing a $20 billion currency swap agreement. The peso opened over 10% stronger today, though much of the move reversed by the market close, while Argentina’s main benchmark stock index closed nearly 22% higher.