investingLive Americas FX news wrap 20 Aug;Fed minutes show majority worry about inflation

The day got off to a bang with a tweet from the Director of the Federal Housing and Financing Association, Bill Pulte, with accusations that Fed Gov. Cook “potentially” committed mortgage fraud on two properties that she purchased. The accusation is that Cook declared the properties to be her primary residence. The accusation was referred to Attorney General Bondi.

Putle tweeted that “Lisa Cook was cooked” and Pres. Trump chimed in that she should resign immediately. She was not charged with a crime.

Obviously, it is in Trump’s interest to get as many Fed Governor’s to resign, be fired, leave the Fed Board as it allows him to appoint new replacements.

If Cook did commit mortgage fraud, how is it treated under the law? Is that penalty, grounds for dismissal? Most times, no (see post here)

Is it a political ploy?

Pulte denied that by saying that they got a “tip” and investigated. If he didn’t investigate, he would be doing its job.

The dollar did dip a bit on the expectation, the Fed Board, would become the Trump board and rates could be moved lower, even if the votes are 7-5.

In other news today, the the FOMC meeting minutes were released with the majority judging the upside risk to inflation as greater of the two risks.

“Participants generally pointed to risks to both sides of the Committee’s dual mandate, emphasizing upside risk to inflation and downside risk to employment. A majority of participants judged the upside risk to inflation as the greater of these two risks, while several participants viewed the two risks as roughly balanced, and a couple of participants considered downside risk to employment the more salient risk.

They added on inflation risks:

“Regarding upside risks to inflation, participants pointed to the uncertain effects of tariffs and the possibility of inflation expectations becoming unanchored.

Regarding downside risks:

“In addition to tariff-induced risks, potential downside risks to employment mentioned by participants included a possible tightening of financial conditions due to a rise in risk premiums, a more substantial deterioration in the housing market, and the risk that the increased use of AI in the workplace may lower employment.”

The problem with the meeting minutes is that the meeting took place before the US jobs report on August 1 which changed the average job gain over 3 months from 150K to 35K in one fell swoop. That changed the view from an inflation focus to a dual focus It is hard to justify a cut on inflation with it well above 2%

Consumer Prices (CPI)

Headline CPI (YoY): 2.7%
Core CPI (YoY): 3.1%

Producer Prices (PPI)

Headline PPI (YoY): 3.3%
Core PPI (YoY): 3.7%

US stocks moved sharply lower with the Nasdaq down over 400 points at session lows. However, as the day wore on, the price started to recover. The NASDAQ index is still closing down -142.10 or 0.67% on the day, but averted a more bearish technical close (see post here). . The S&P index also close lower but only by -0.24%. The Dow industrial average close marginally higher by 0.04%.

European indices were also mixed in trading today with UK’s FTSE 100 higher, German and Italy indices lower in the other indices little changed.

US yields are closing marginally lower with the two-year down -0.04 basis points, while the 10 year is down -1.1 basis points. The 20 year note auction was met with a little bit better than average demand.

This article was written by Greg Michalowski at investinglive.com.