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A signal worth paying close attention to — the tone from the New York Fed President indicates that a rate hike in September is not set in stone! ┈➤ A special role Actually, the New York Fed President holds a rather unique position. The Federal Reserve is the central bank of the United States, consisting of two parts: one is the Board of Governors, which is the administrative body of the central bank; the other is the 12 regional Federal Reserve Banks responsible for local financial markets. The Federal Open Market Committee (FOMC) is responsible for setting monetary policy, including all 7 members of the Board of Governors and 5 regional Fed Presidents. Among them, the New York Fed President holds a permanent seat on the FOMC, while the other 4 seats rotate among the 12 regional Fed Presidents. Moreover, the New York Fed President serves as the Vice Chair of the FOMC. Therefore, the FOMC is represented by regional Fed Presidents who act as a counterbalance to the Board of Governors. The Board of Governors, as the administrative body, has a stronger macro and political focus, whereas the regional Feds are more closely connected to financial markets — in simpler terms, they are more grounded. Thus, the New York Fed President plays a role in balancing politics and finance within the Fed. ┈➤ A special background Currently, the Fed is in a relatively unique short-term environment. Former Chair Powell remains on the Board as a Governor. Although he has been very low-key, his main motivation for staying is to prevent excessive interference from Trump by nominating Waller. Waller has not been in office long and has yet to establish sufficient prestige and leadership. Therefore, as the FOMC Vice Chair who balances political and financial forces, the New York Fed President’s stance may carry considerable influence at this time. ┈➤ A special risk Although people tend to be rigid in their thinking, the current risk of U.S. Treasury bonds is arguably unprecedented in history. Rate hikes increase Treasury yields and financing costs, further intensifying risks. So, although the New York Fed President Williams is generally described by the media as neutral, his recent remarks have been relatively dovish, suggesting inflation has peaked. Especially today, after the 30-year Treasury yield surged, I suspect he is considering the risks associated with U.S. Treasuries. So, I’m buying a $10 bet that there will be no rate hike in September just for fun.