Yesterday was a very eventful day, as Donald Trump struck a deal with the Democrats on Harvey aid, government funding until December and a suspension of the debt limit until mid-December.
In our view, this is just kicking the can down the road, as we now risk a government shutdown in December and/or a government default at some pint early next year.
Yesterday, the Fed's Vice Chair Stanley Fischer announced that he will step down on or around 13 October, leaving four empty seats in the Board of Governors.
The Wall Street Journal reports that President Trump is unlikely to nominate Gary Cohn as the next Fed Chair. This has increased the probability of the reappointment of Janet Yellen but Trump is known for wanting his own people in key positions.
The many empty seats mean that it is difficult to say what direction the Fed will take next year. The Republicans may use the opportunity to shift the Fed in a more hawkish and rule-based direction.
To read the entire report Please click on the pdf File Below: