MacroVoices #543 Jim Bianco: Who Solves Inflation The FED or The Market?

**Jim Bianco** (0:00)
Bond traders can stop panicking when the Fed starts panicking. Well, the Fed didn't panic today, so bond traders panicked.

**Erik Townsend** (0:11)
That was Jim Bianco, I'm Erik Townsend, and this is Macro Voices, the free weekly podcast targeting professional finance and sophisticated private investors.
Episode 543 was produced on July 30th, 2026 Jim Bianco and I will discuss this week's FOMC meeting and how it led the 30-year treasury note to a 19-year record-high print of 5-spot-20. We'll talk about the impact on bond and stock markets, the state of the economy, the Iran conflict, and artificial intelligence in this week's episode. And after the feature interview, Patrick's going to turn Jim Bianco's market outlook into a risk-defined trade.

**Patrick Ceresna** (0:51)
And I'm Patrick Ceresna. Let's dive straight into this interview.

**Erik Townsend** (0:55)
Jim, it's great to get you back on the show. We wanted to line you up for an FOMC week, and boy, they gave you plenty to talk about. There was no action at the meeting, in theory, although there certainly is news out of the meeting. So give us some color on what happened, why it's significant.

**Jim Bianco** (1:09)
Yeah, so you're right. The markets had a wild reaction to the Fed. Let me start with the bigger picture so everybody understands what's going on with this Fed. Trump has been bashing the Fed for two years, and the Fed has been very worried about their independence. And the way that they have resolved their problem with independence is the voters now are starting to act independently. I know I'm using the word independence a lot here.
And so that's why you're starting to see a lot of dissents. And we had three dissents today that were in favor of hiking rates today.
So what's changed with the Fed that we're talking about raising rates when you could credibly say, what's changed with the data in the last two months? We didn't talk about it two months ago. At the June meeting, we didn't talk about it at the May meeting. Why we all worked up about inflation now and raising rates now?
Because the voters have always been suppressed under the thumb of the Federal Reserve Chairman. He tells them what he thinks, he tells them how they're going to vote, he tells them what they're going to say, and that's what they do. Now, the voters are allowed to act independently, and we're finding out that they are a lot more hawkish, and probably were disposed to raising rates a lot sooner than this meeting. And so, we're starting to see that unfold. So, that's the first part that's going on with the independence. The second part is, Warsh doesn't believe in forward guidance. Again, if you're not familiar with the term, it just means the Fed signals what they're going to do. I agree with him that forward guidance has been problematic for the Fed for many years. Why is it problematic? Because it's always taken as a promise. Whenever the Fed says, you know, if the data continues this way, we'll cut rates or hike rates, the market just pencils in that it's a certainty, that's what they're going to do. And since market participants think it's a certainty, they tend to over-speculate and kind of get over their skis. And then we get instances like Silicon Valley Bank not hedging their interest rate exposure and causing a potential financial crisis, or the repo market blowing up in September 19, or other what the Fed's fancy word is moral hazards. So those are the two things that are changing about this Fed. So when you walk into this press conference, the press conference was designed for a Fed that had forward guidance. That's where they're supposed to kind of give us clues as to what's coming next.
But Warsh doesn't believe it, so he kind of non-answered every question, and he didn't really offer a whole lot in the answers that he gave.
And, you know, stylistically, my impression was he came off a little bit condescending to some of the reporters on some of the questions as well, too. But that's just a stylistic thing that we'll have to get adjusted to. So I think that the market is still stuck with the old thinking. We're going to watch the presser because the chairman's going to tell us what the Fed's going to do, not ready to accept that he's only one of 12 voters, and when he doesn't tell us what we're going to do, we're going to get very disappointed. Now, last thing I'll say, what kind of kicked this all off, in my opinion, is if there was one thing that he talked about at the press conference that might have been problematic for the Fed was, let me back up and say, on July 13th, Chris Waller gave a speech, Fed Governor Chris Waller.