Just dropped · Trial Balloon · Ep. 191
Blue Wave Update
“Key Democrats on Thursday unveiled legislation that would force federal regulators to disclose financial records related Jeffrey Epstein and his associates,” Bloomberg reports.
“The measure also would require regulators to investigate banks and their executives for potential related legal violations.”
“Lisa Cook on Tuesday challenged President Trump’s latest attempt to remove her from her role as a Federal Reserve governor, questioning the objectivity of a White House investigation into unproven allegations that she committed mortgage fraud,” the New York Times reports.
Bloomberg: “Traders had grown accustomed to prices lurching wildly on developments in the Middle East. But this time, some bettors had timed it perfectly. Billions of dollars’ worth of contracts predicting oil would fall and the S&P 500 would rise were placed about 15 minutes before the president announced his U-turn in a post on Truth Social, fueling widespread speculation about whether someone had an unfair advantage.”
“Responsibility for looking into the incident fell to the U.S. Commodity Futures Trading Commission… There, a team of career forensic analysts embarked on their usual task of pulling together data on the day’s winners and losers.”
“Based on the timing of the trading they observed and who was behind it, the analysts, from the agency’s Division of Market Oversight, filed a referral to the Division of Enforcement, which would decide whether to launch a full-scale investigation into potential insider trading…”
“What happened next, they said, was highly unusual: Mel Gunewardena, a senior adviser to the agency’s Trump-appointed chairman, Michael Selig, told a supervisor within the market oversight team to retract the referral.”
“President Donald Trump is establishing a committee to investigate mortgage fraud allegations against Federal Reserve Governor Lisa Cook and is forcing her to appear at a White House hearing to defend herself, a dramatic escalation in his efforts to oust her from her role,” Bloomberg reports.
CNBC: Trump appoints committee to investigate statements by the Fed’s Lisa Cook.
“A couple more interest rate hikes are probably on the way. But the Federal Reserve is in no great hurry to deliver them. That’s the takeaway from the latest round of communications out of the central bank,” Axios reports.
“It implies that the Fed is not in a full-scale effort to tighten the screws on the economy, but rather a cautious recalibration in light of inflationary pressures and robust growth.”
Bloomberg: “Policymakers at the Fed, whose day job is to control inflation, are warning that borrowing costs are going to have to push higher if prices are to be brought under control.”
“Minutes of the Federal Open Market Committee’s Sept. 15-16 meeting, where officials decided to raise interest rates for the first time since 2023, showed that all 19 Fed policymakers backed the decision with several indicating there’s more work to do.”
“Wall Street took home a record bonus haul in 2025. This year is expected to be even better,” the Wall Street Journal reports.
“The nation’s biggest banks have raked in profits from both Wall Street businesses and their Main Street consumers, reflecting booms in corporate dealmaking, initial public offerings, artificial intelligence and market volatility as well as a resilient consumer.”
“Mortgage rates posted their largest increase in four years this week, one of the clearest signs of how the recent bond-market selloff is spilling into the broader economy,” the Wall Street Journal reports.
“Mortgage rates are rising as inflation, a surge in government debt and heavy corporate borrowing for the build-out of AI push up bond yields, which move in the opposite direction of bond prices. The bond-market selloff is raising borrowing costs for home buyers and dealing blow after blow to a limping housing market.”
David Frum: “This has been a week of pain for anyone who borrows money.”
“All over the world, lenders are demanding higher interest rates. The global bond market is extracting higher yields from every borrower, starting with the biggest borrowers of all: national governments. But not every government is paying equally.”
“Trustworthy borrowers with solid finances and honest leadership pay less. Distrusted borrowers with disordered finances and corrupt leaders pay more. In times past, the United States would have headed that first list. Under President Trump, the United States has tumbled onto the second one.”
“The U.S. economy keeps powering through inflation, tariffs and higher borrowing costs, defying a run-up in Treasury yields and a Fed rate increase. That has the bond market spooked,” the Wall Street Journal reports.
“The usual economic brakes aren’t slowing growth, hiring or an AI investment boom that looks to be unstoppable. To some, AI’s potential returns seem so bright that even steep interest rates won’t slow down tech companies’ investments.”
“The decision we made today was a sober decision, serious decision, responsible decision, one that we have been preparing for and thinking about in my hundred and ten or twenty days here.”
— Federal Reserve Chairman Kevin Warsh, quoted by Bloomberg, on defying President Trump and voting to hike interest rates.
“The Federal Reserve raised interest rates Wednesday for the first time in three years, a sharp reversal that began taking back cuts it made last year and implicitly undercut the White House’s insistence that inflation isn’t a concern,” the Wall Street Journal reports.
“The increase, approved unanimously, will raise the benchmark federal-funds rate range by a quarter point to between 3.75% and 4%.”
CNBC: “Updated projections the committee released Wednesday showed that a strong majority of officials think another hike is possible later this year.”
Bloomberg: “With their decision to raise rates, policymakers also defied Trump, who recently threatened to escalate his trade wars if the Fed doesn’t lower interest rates.”
“President Trump’s claim that Ukraine agreed to halt strikes on Russian energy targets coincided with a pullback in oil prices and Treasury yields Monday,” Axios reports.
“Why it matters: Ukrainian drone strikes on Russia have crippled large swaths of the country’s refining capacity, creating embarrassing shortages and prompting Russian officials to curtail exports to shore up domestic supplies.”
“The benchmark 10-year Treasury yield climbed to its highest level since 2007 on Tuesday as a sell-off in U.S. government debt deepened ahead of the Federal Reserve’s interest-rate decision, which could ripple through the economy,” CNBC reports.
Bloomberg: U.S. borrowing costs soar to highest since 2007.
“Equity investors largely yawned Monday at warnings about AI wiping out humanity, suggesting traders aren’t pricing in an existential threat,” Axios reports.
“The 10-year U.S. Treasury yield briefly broke above 5% as widening instability in the Middle East pushed up oil prices, deepening investor concerns about inflation,” the Wall Street Journal reports.
Financial Times: Warsh and Trump on collision course as investors expect Fed to raise rates.
“President Donald Trump reiterated that the U.S. should have the lowest interest rates in the world even as his handpicked chair for the Federal Reserve, Kevin Warsh, faces renewed pressure to raise borrowing costs,” Bloomberg reports.
Said Trump: “We should be paying — the United States is so strong — we should be paying the lowest interest rate in the world, regardless of their formulas.”
CNBC: “Hotter-than-expected inflation data has turned next week’s Federal Reserve meeting into a defining test for Chairman Kevin Warsh. His choice now is whether to raise interest rates, or look like he isn’t in control of the central bank he leads.”
Taegan Goddard
Taegan Goddard is the founder of Political Wire -- which for more than two decades has been one of the nation's most influential political news sites.
More about Taegan Goddard →