Will Waller cut interest rates? We may have underestimated Waller's cunning!

Let me share a recent feeling that seems off. It’s Waller’s stance on rate cuts during the hearing, and the recent strength of the market. Why does it feel so strange?

First, who is Waller? A cunning flip-flopper! Early on, Waller was a typical hawk at the Federal Reserve, consistently advocating against inflation and opposing excessive easing, with a generally tight policy stance. But since Trump nominated him to be Fed Chair and he was expected to take office in mid-May, his public statements have clearly shifted: from a tough hawk to gradually emphasizing the pressures of high interest rates on the economy and the housing market, continuously signaling a dovish tilt towards rate cuts. The timing closely coincides with the White House’s push for rate cuts.

What’s even more interesting is the recently concluded hearing: he repeatedly emphasized “maintaining the independence of the Federal Reserve and absolutely not being a puppet for the President,” but this may not hold water. On one side, he has reversed his stance 180 degrees over the past half-year to cater to the nomination; on the other, Trump openly said “I will be disappointed if he doesn’t cut rates”; and on the third, he has decades of close personal ties with Trump’s family.

In this context, the so-called “independence” seems more like a standard phrase to reassure Congress, and its credibility is not high.

So, is the market currently pricing in this: once Waller takes office, to fulfill the previous shift and align with policy direction, the pace of rate cuts will likely accelerate, and risk appetite will increase accordingly. This might be the core logic behind the recent market strength?

It’s a bit of a conspiracy theory, but we must remain vigilant, paying close attention to whether the US non-farm payroll data in May will surprise us, and Waller’s true stance on rate cuts when he takes office on May 15.