Waller's Stance on Interest Rates Sends Markets into Turmoil

Federal Reserve Governor Christopher Waller's comments on interest rates have sent shockwaves through markets. In a report from Reuters, Waller indicated that he is inclined to keep rates steady later this month, sparking a strong rally in stocks and dragging bond yields lower.

The Japanese yen recorded its strongest New York trading day close since the U.S.-Iran war began. According to Reuters, Waller's comments have made it a coin flip whether the Fed holds rates or delivers the first hike in three years, based on rates futures pricing.

Waller pleaded to give disinflation a chance, but also said he would raise rates if inflation comes in hotter than expected. The ownership structure and risk profile of the U.S. government bond market have changed over the years, with China no longer providing stability due to being replaced by more volatile investors.