It's the long end that matters now/BoE cuts/Earnings rundown

There is one thing to harass and jawbone Jay Powell to lower short term rates and another completely different thing trying to tame the long end of the yield curve which of course can only be influenced indirectly (outside of the Fed itself directly getting involved via asset purchases). Treasury Secretary Scott Bessent said on Fox Business yesterday that he and Trump are "focused on the 10 year Treasury. He is not calling for the Fed to lower rates." Their goal in keeping long rates low is reliant on calming inflation and mostly via lower energy prices but as we know, something that is tough to control in terms of convincing oil companies to drill more when the price is not necessarily right. Also helping will be lower government spending and cutting its size. If so, Bessent says "we're going to go into a good interest rate cycle." On the spending, efficiency side, that is something directly in their purview, let's hope it succeeds.

Similar to the ECB, the Bank of England's sole mandate is supposed to be inflation but they are also more focused on slow economic growth and cut their bank rate by 25 bps to 4.50% as expected with two members wanting to cut 50 bps including the usual hawk Katherine Mann which was not expected. The other 7 agreed to cut 25 bps. "In support of returning inflation sustainably to the 2% target, the Committee judges that there has been sufficient progress on disinflation in domestic prices and wages." They finished up their statement by saying again, "Monetary policy will need to continue to remain restrictive for sufficiently long until the risks to inflation returning sustainably to the 2% target in the medium term have dissipated further."

With two members wanting a 50 bps cut today, the 2 yr yield is down by 6 bps on the day to 4.09% and the pound is down 1%.