Are Trump and Waller putting on a double act? One is hinting like crazy about potential rate hikes, while the other is demanding rate cuts like mad! Trump just publicly said that the U.S. is the world’s number one, so it should have the lowest interest rates globally. Discussing rate hikes now is absurd. But three days ago, Waller made some strong remarks at Jackson Hole: U.S. PCE inflation is still at 3.7%, employment is near full employment, and if inflation doesn’t clearly and quickly return to 2%, the Fed still has work to do. The market is already siding with Waller. After his Jackson Hole speech, the probability of a September rate hike jumped from 35.4% to 55.7% at one point, and now it’s around 60%. The 2-year U.S. Treasury yield surged nearly 13 basis points that day, Bitcoin dropped 3.3%. Barclays even changed its forecast from no rate hikes this year to expecting 25 basis points in both September and December. The U.S. 10-year Treasury yield is now above 4.7%, and oil prices are nearing $90 again. If the market believes the Fed is being politically pressured to cut rates despite 3.7% inflation, short-term rates could indeed be pushed down. But inflation expectations, term premiums, and dollar credit risk could very well drive long-term rates even higher. Mortgage rates, corporate financing costs, and the actual money the U.S. government has to pay might not drop after all.