Fed chair Waller restates his rate view as bonds shift with oil jump

Christopher Waller entered the final stage of the Fed chair race, saying he will tell President Donald Trump that central bank independence is not optional. He told CNBC he will “absolutely” make that point when they meet. He is one of five finalists to replace Jerome Powell when Powell’s term ends in May.

Waller meets Trump later today, and he said he plans to raise the issue without hesitation. At the Yale CEO Summit, he said he spent 20 years working on the subject and has a long record that shows why it matters.

Trump has often pushed the Fed to cut rates faster and attacked Powell’s decisions. He also argued the central bank moved too slowly on easing.

Trump has even talked about firing Powell before his term is up. This made some investors worry the next chair could be someone who does whatever the White House wants.

Waller said the biweekly breakfast between the Fed chair and the Treasury Secretary is where the White House and the central bank should talk. He said that the process works and should stay in place.

Waller restates his rate view as bonds shift with oil jump

Treasuries moved after Waller repeated his dovish view on U.S. interest rates. Short-maturity yields eased back and held near flat.

Earlier in the day, losses grew as crude oil bounced from a multi-year low. Investors are also prepared for a 20-year bond sale. Long-maturity yields stayed higher by about two basis points ahead of the $13 billion auction at 1 p.m. in New York.

Oil rose after the U.S. announced a blockade on Venezuelan supply. That jump removed a recent support for the bond market. Gasoline prices at the pump dropped to a four-year low this week.

That put pressure on inflation and inflation expectations. The move in crude added fresh tension for traders watching yields, the auction, and the signals coming from Waller as he waits for his interview with Trump.

Waller’s comments on independence, his years of work on the issue, Trump’s pressure on the Fed, the concern about a compliant chair, the channel of communication he prefers, and the reaction in Treasuries all shaped the mood around the race for the Fed’s top job.

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