Mixed Fedspeak Undermines Rate Cut Bets

Yields inch higher as rate cut hopes continue to fade. Treasury yields declined 6 bps this morning but quickly reversed course as doubts about a December rate cut grew. The 2-year yield closed 1bp higher at 3.61% while the 10-year yield closed 3 bps higher at 4.15% (both 5 bps higher on the week). Meanwhile, riskier assets traded lower, with Bitcoin dipping below $95,000 for the first time in nearly six months and almost wiping out its gains for 2025. The S&P 500 and DJI also declined 0.05% and 0.65%, respectively, as AI names saw sharp swings today.

Fed divide on display. Several Fed officials offered differing views on policy outlook today, building on yesterday’s Fedspeak in which Hammack and Musalem favored holding rates steady while others remained cautiously open to a December cut. Kansas City Fed President Jeff Schmid argued that further rate cuts will not do much to support the weakening labor market, but “cuts could have longer-lasting effects on inflation as our commitment to our 2% objective increasingly comes into question.” Schmid notably dissented at the October FOMC meeting in favor of holding rates steady, though he has adopted the Fed’s data-dependent approach. Similarly, Dallas Fed President Lorie Logan said she currently does not see a case for further easing, but if there is “convincing evidence that inflation is really coming down faster than my expectations or that we were seeing more than the gradual cooling that we’ve been seeing in the labor market.” Meanwhile, Fed Governor Miran reiterated that it is “very appropriate” to cut rates in December, based on the state of the labor market.

President Trump reduces some tariffs on food and other commodities. The White House announced today that it would be reducing some import tariffs on specific commodities including beef, tomatoes, coffee, and bananas. The move is aimed at lowering grocery costs and comes in response to criticism from voters about rising food prices. The reversal is also viewed by some as an acknowledgement by the Trump Administration that tariffs have raised costs for consumers. The official reasoning for the reversal the White House gave is that tariffs will be reduced on commodities that cannot be produced in the US in sufficient quantity to meet domestic demand. The tariff order was back dated to go into effect at 12:01 am EST on November 13.