Rates as of 0500 GMT

Market Recap

It seems that much of Tuesdays action was driven by something that happened Monday afternoon European time that I didnt mention in Tuesday mornings comment. Fed Gov. Waller said he wants to see 50 bps hikes at every meeting until we see substantial reductions in inflation. Until we get that, I dont see the point of stopping. Thats odd, because its well known that monetary policy operates with a lag of six to nine months at least some say as much as 18 months. Its like saying Im not going to turn this oil tanker until were in the harbor, neglecting to note that it takes so long to turn the ship that it will crash into the dock before it turns.

One possible reason for his determination  the politics of inflation. Right now, President Bidens popularity is lower than even The Former Guys was at the same time in his administration, according to the statistical website fivethirtyeight.com The green line is Bidens popularity, the grey line is the other fellows.

This may be why President Biden Tuesday met with Fed Chair Powell and Treasury Secretary Yellen to discuss his top priority addressing inflation. Of course this is just political theater since everyone knows the President cant do much about it. But its also about giving the Fed political cover if its policies prove unpopular, as Fed Chair Volckers did in the 1980s when a 20 fed funds rate managed to quell inflation at the cost of 11 unemployment.

Meanwhile, President Biden may…