Episodes
How the Fed Reads the Core PCE Puzzle
On this episode of The Federal Reserve Podcast, Lucas and Luna dig into the gap between the CPI and the Fed's preferred inflation gauge, the core PCE price index. With CPI ticking up in July but core PCE cooling in the latest reading, the hosts explain why the Fed leans on PCE, how the weights differ, and what the 10-year breakeven rate—now at 2.27 percent—says about market expectations. They walk through the Fed's internal debate: is the recent CPI pop a signal or noise? And they discuss why…
The Fed Is Watching the Two-Year Yield's Message
The two-year Treasury yield has been sending mixed signals, rising and then falling as markets parse the Fed's next move. In this episode, Lucas and Luna break down why the Fed watches this specific maturity so closely, what the recent swings suggest about rate expectations, and why the yield curve's message might be more reliable than the latest CPI print. They discuss the current level near 3.70 percent, the Fed's effective rate at 3.63, and the ten-year breakeven falling to 2.24 percent.…
Why the Fed Keeps a Window Open to Rate Hikes
The Fed's benchmark rate has been parked at 3.63 percent since July, but the July CPI report shows inflation at 3.4 percent, while the ten-year breakeven rate dipped to 2.27. In this episode, Lucas and Luna dig into the Fed's subtle signals that it hasn't closed the door to another hike—even as markets assume the next move is a cut. They discuss the central bank's language around 'adjustments' versus 'cuts,' why the two-year yield's recent rise complicates the narrative, and what the budget…
Why the Fed Is Watching the Two-Year Yield So Closely
In this episode of The Federal Reserve Podcast, Lucas and Luna dive into the recent moves in the two-year Treasury yield and why it has become the Fed's favorite market signal. They explore the mechanics of how the two-year yield reflects rate expectations, the recent rise in the yield to 4.69 percent while the Fed holds steady, and what this means for the policy path in the fall. They also discuss the disappointing July jobs report, which showed a loss of 23,000 jobs, and how that feeds into…
How the Fed Reads the July Jobs Report
The July jobs report landed with a jolt: a loss of 23,000 jobs, the first outright decline in years, while the unemployment rate held steady. In this episode, Lucas and Luna unpack what the Fed actually sees in these numbers—and why the headline misses the point. They break down the signal in the ADP private payroll figure of 44,000, the cooling in wage growth, and how the Fed's own projections now point to a rate cut in September, despite the sticky core PCE reading of 130.3. With the two-year…
Why the Fed Is Watching the Wage-Price Spiral Signal
In this episode, Lucas and Luna examine a subtle but critical signal the Federal Reserve is monitoring after the disappointing July jobs report: wage growth. With the U.S. economy unexpectedly losing 23,000 jobs in July, the hosts drill into why the Fed cares more about average hourly earnings than the headline payroll number. They explain how the wage-price spiral could re-ignite inflation even as CPI cools, and why the central bank's preferred PCE measure might be lagging. Using the latest…
Why the Fed Watches the August Jobs Report With Extra Care
In this episode, Lucas and Luna dig into why the July jobs report landed with a thud and what it means for the Federal Reserve's next move. They unpack the unexpected loss of 23,000 jobs, the slowdown in private hiring, and how the Fed is interpreting these numbers against the backdrop of easing inflation. With the two-year Treasury yield ticking up and the ten-year breakeven rate dipping, they explain what the bond market is signaling about the Fed's policy path. This isn't just about the…
Why the Fed Watches the Jobs Report's Wage Signal
After the July jobs report showed a surprise loss of 23,000 jobs, the Federal Reserve is parsing more than just the headline. Lucas and Luna dig into why the Fed watches the wage growth component closely, how a cooling labor market interacts with sticky core inflation, and what the recent rise in ten-year breakevens tells us about market expectations. They also unpack the disconnect between the ADP private payroll number and the official count, and what it means for the Fed's next move. If…
Why the Fed Is Watching the Yield Curve's Message
In this episode of The Federal Reserve Podcast, Lucas and Luna dig into one specific signal the Fed is tracking this August: the curve between the short end and the long end, and the real rate that sits underneath. With the effective fed funds rate pinned at 3.63 percent and the ten-year Treasury near 4.67 percent, the spread is telling a story about where the economy is headed. They examine why a steeper curve usually means optimism, but right now it's being driven by falling inflation…
Why the Fed Watches the New York Fed's Supply Chain Index
On the 150th episode of The Federal Reserve Podcast, Lucas and Luna drill into a data point the Fed has quietly been leaning on: the New York Fed's Global Supply Chain Pressure Index. With imported-goods inflation cooling but the manufacturing survey flashing 'worse than pandemic era' price worries, the hosts explain why the Fed tracks the flow of shipping containers, port backlogs, and freight rates — and how a 1.2-point drop in the index helped justify the current pause. They also unpack the…
Why the Fed Is Obsessed With the Real Rate
Lucas and Luna unpack the Federal Reserve's subtle pivot toward the real interest rate — the nominal rate minus inflation expectations — and why it matters right now. With the effective fed funds rate at 3.63 percent and ten-year breakevens sliding to 2.27 percent, the real rate has quietly climbed to levels not seen since before the 2008 crisis. The hosts explain how this shift is shaping the Fed's reaction function under Chair Kevin Warsh, why a divided FOMC is reading the same data…
Why the Fed Watches the Manufacturing Price Hike Signal
In this episode of The Federal Reserve Podcast, Lucas and Luna dig into a surprising new signal that has Fed Chair Kevin Warsh's attention: a manufacturing survey from August 2026 showing price pressures 'worse than the pandemic era.' While headline CPI is cooling and the Fed funds rate sits at 3.63 percent, this factory-level inflation reading hints at a different story. They unpack what the survey's price index actually measures, why it conflicts with softer consumer inflation data, and…
Why the Fed Tracks the Real Rate Through Ten-Year Breakevens
In Federal Reserve Podcast episode 147, Lucas and Luna examine why the Fed is zeroing in on the real interest rate derived from ten-year breakevens. With the ten-year breakeven ticking up to 2.28 percent while core PCE climbs to 130.3, the hosts decode what this signal means for Warsh's Fed amid a divided committee and slowing GDP. They break down how the real rate influences borrowing, investment, and the neutral rate debate, and why a rising real rate could tighten financial conditions more…
The Fed's Quiet New Tool for Inflation Control
In episode 146 of The Federal Reserve Podcast, Lucas and Luna dig into a shift in how the Federal Reserve under Kevin Warsh is approaching inflation control: the renewed emphasis on the interest on reserve balances (IORB) rate as a precision tool. With the fed funds rate at 3.63% and IORB at 3.65%, the hosts explain why the Fed prefers this fine-tuning mechanism over the broader fed funds target range. They explore the mechanics of how IORB influences bank behavior and market rates, and its…
How the Fed Weighs Slowing GDP Against Sticky Core Inflation
In this episode of The Federal Reserve Podcast, Lucas and Luna break down the Fed's dilemma after Q2 GDP came in at just 1.5% while core PCE inflation remains at 3.3%. They discuss how the internal divide at the FOMC is shaping expectations for the next move, and what the 10-year breakeven rate at 2.26% tells us about market sentiment. With the fed funds rate at 3.63% and the two-year yield falling below 3.7%, the hosts explore whether the economy is heading for stagflation or a soft landing…
The Fed's Internal Divide Over Inflation Data
The Federal Reserve is publicly united but privately split. As of late July 2026, PCE inflation is creeping up while CPI eases — and Fed officials are drawing opposite conclusions. In this episode, we examine the two camps: the hawks who see sticky services and rising breakevens (now at 2.26 percent) and the doves who point to falling goods prices and a cooling economy. We discuss how this division is paralyzing forward guidance, what it means for the September FOMC meeting, and why the bond…
Why the Two-Year Yield Is Falling Again
In this episode, Lucas and Luna revisit the two-year Treasury yield, which has reversed its recent uptrend and dropped roughly 10 basis points in a week to 3.69%. They explore why the bond market is now pricing in a Fed rate cut as soon as November, despite a slight uptick in core PCE inflation. The discussion contrasts the US market's easing bets with Singapore's surprising tightening move, and highlights what the interest on reserve balances (IORB) at 3.65% tells us about the Fed's likely…
Why the Two-Year Yield Is Rising While the Fed Holds
The two-year Treasury yield has climbed to 3.76% even as the Fed funds rate sits flat at 3.63%. Lucas and Luna unpack what's behind the move: new tariff measures, a surprise jump in import prices from China, and the market's growing expectation that the Fed may need to tighten despite falling breakeven inflation. They discuss whether the Fed will acknowledge this signal at the upcoming FOMC meeting and what history says about the reliability of short-term rate moves. #FederalReserve…
Why Shelter Inflation Is the Feds Biggest Headache
CPI fell in June, but shelter costs remain stubbornly above 5 percent year-over-year. Lucas and Luna break down the lag between market rents and official inflation measures, what the Fed watches instead, and why the ten-year breakeven rate at 2.21 percent suggests investors expect the Fed to win — but not just yet. With global central banks tightening and tariffs resurfacing, the housing data may be the deciding factor for the September meeting. #ShelterInflation #FederalReserve #CPI #CoreCPI…
How Kevin Warsh's Phrases Reveal the Fed's Next Move
In Episode 140, Lucas and Luna decode three key phrases from Kevin Warsh's recent speech that hint at the Fed's thinking amid falling breakeven rates (2.21%) and rising core PCE (130.1). They explore how the Fed's communication strategy matters more than ever when data sends mixed signals, and what it means for the rate path ahead. Plus, a quick note on how listener support keeps the podcast ad-free. #FederalReserve #KevinWarsh #MonetaryPolicy #FOMC #Inflation #BreakevenRate #CorePCE…
Why Falling Breakeven Rates Give the Fed Cover Despite Sticky PCE
In this episode of The Federal Reserve Podcast, Lucas and Luna unpack the paradox of falling market-implied inflation expectations — the 10-year breakeven rate dropped to 2.21 percent in late July 2026 — even as core PCE ticked up to its highest level in months. They explore why the Fed prioritizes the breakeven over backward-looking data, how the Singapore central bank's surprise tightening contrasts with the Fed's patient stance, and whether the bond market's vote of confidence could be…
How the Fed Weighs Tariff and Oil Shocks Against Soft Inflation
On July 24, 2026, President Trump announced a new global tariff, and import prices from China hit their highest level since 2008. Meanwhile, core CPI fell and the Fed's preferred PCE measure rose. In this episode, Lucas and Luna explore how the Federal Reserve is reconciling these contradictory signals: supply-side inflation pressures from tariffs and rising oil versus cooling domestic demand. With the fed funds rate flat at 3.63% and breakeven inflation edging down, the Fed faces a delicate…
Why the Fed Is Rethinking the Neutral Rate This Summer
The neutral rate of interest, or r-star, is the Fed's invisible anchor for monetary policy. In this episode, Lucas and Luna break down why the New York Fed's latest estimate of r-star is rising and how that could reshape the rate path mid-2026. They tie it to the ten-year yield's recent jump to 4.68 percent, the breakeven inflation rate dipping to 2.26 percent, and the puzzling gap between falling CPI and rising PCE. If the neutral rate is higher, the current 3.63 percent fed funds rate may not…
Why the Fed Trusts PCE Over CPI
The Fed's favorite inflation gauge, the PCE price index, is rising while CPI falls. In this episode, Lucas and Luna break down the structural differences between the two measures, why the Fed prioritizes PCE, and what the current divergence means for the rate path in July 2026. With core CPI at 336.1 (down) and core PCE at 130.1 (up), the signals are mixed. The hosts explain how the Fed reads these conflicting data points and how changes in consumer behavior, especially around housing and…
How the Fed Decodes Conflicting Signals from CPI and PCE
In this episode of The Federal Reserve Podcast, hosts Lucas and Luna examine a puzzling split in the latest inflation data: headline CPI fell for the third straight month, while core PCE edged up. They explore why the Fed's preferred measure, PCE, is bucking the trend, how the 10-year breakeven rate suggests expectations remain well-anchored, and what this means for the rate path as the committee enters the August lull. With Fed watchers parsing Kevin Warsh's recent comments and import prices…
Why the Yield Curve Steepening Is Rattling the Fed
The ten-year Treasury yield has surged to 4.68 percent, its highest in months, while inflation expectations are actually falling. Lucas and Luna explain why this disconnect between nominal yields and breakeven rates is sending a warning signal to the Federal Reserve. They break down what rising real yields mean for monetary policy transmission, how Fed governor Kevin Warsh's recent three-phrase vocabulary hints at the central bank's concern, and whether the steepening curve could force the Fed…
How the Fed Reads Import Price Surprises in July 2026
Episode 133 of The Federal Reserve Podcast with Fexingo. Lucas and Luna unpack the surprise jump in import prices reported July 17, 2026, when costs of goods from China hit their highest since 2008. They examine how the Fed's preferred core PCE measures—core PCE at 130.1 in May, up from 129.67—may be distorted by this spike, and what it means for the rate path with the fed funds rate flat at 3.63 percent. The hosts discuss Kevin Warsh's recent phrases, the ten-year breakeven at 2.28, and…
Why the Fed Watches the Consumer Stress Signal in July 2026
Lucas and Luna dig into a less-discussed indicator the Fed is eyeing in July 2026: consumer stress signals from restaurants and bars, especially after the World Cup bump. With the effective fed funds rate steady at 3.63% and core CPI barely budging, the Fed is parsing mixed data to decide its next move. Lucas breaks down why the Fed's Beige Book noted a World Cup boost for bars — but also that consumers are flashing warning signs. They connect that to the surprise gain in import prices from…
Why the Fed Is Watching the Ten-Year Breakeven Rate Now
The ten-year breakeven inflation rate edged up to 2.28 percent on July 22, 2026, even as core CPI and PCE data show disinflation. Lucas and Luna unpack why the Federal Reserve is increasingly focused on this market-based measure — not the backward-looking CPI or PCE — as a real-time signal of inflation expectations. They explain how breakevens work, why a rising breakeven alongside falling core inflation is a puzzle the FOMC can't ignore, and what it means for the rate path ahead. Anchored to…
How the Fed Balance Sheet Runoff Is Hitting Bank Reserves
Episode 130 digs into a quietly critical mechanism of Fed policy: the ongoing runoff of the central bank's balance sheet, known as quantitative tightening. With the Fed funds rate flat at 3.63% and interest on reserve balances steady at 3.65%, the focus has shifted from rate cuts to the shrinking pool of bank reserves. Lucas and Luna explain how the Fed's reverse repo facility has nearly drained, why reserves are starting to feel the pinch, and what the 'floor system' means for the plumbing of…
What the Fed Funds Rate Teaches Us About Everything
The federal funds rate is the single most important number in finance, yet most people misunderstand what it actually controls. In this episode, Lucas and Luna break down how the current 3.63 percent effective rate connects to the broader economy, why it's not a direct lever on mortgage rates or credit cards, and what the flat rate since June tells us about the Fed's strategy. They use the recent 10-year yield move to 4.65 percent and the decline in CPI to explain how the funds rate shapes…
What Falling Core CPI Means for the Fed Despite Sticky Services
In episode 128 of The Federal Reserve Podcast, Lucas and Luna dig into the June 2026 CPI data: headline CPI fell to 332.6, core CPI dipped to 336.1, and the 10-year breakeven inflation rate ticked up to 2.26. They explore why the Fed is cautious about declaring victory — services inflation, especially in housing and healthcare, remains stubborn. They also discuss the surprise uptick in import prices from China and how that could complicate the rate path. A focused look at the mixed signals the…
How the Fed Reads China Import Prices in July 2026
Import prices from China just hit their highest level since 2008, even as domestic inflation cools. Lucas and Luna unpack how the Fed interprets this divergence — why a rise in imported goods costs doesn't necessarily signal broader inflation, and how it complicates the rate path. They ground the discussion in the latest CPI and core PCE data, the surprise wholesale price decline, and the Fed's own Beige Book anecdotes. Plus, a brief note on how listener support keeps this show ad-free.…
How the Fed Interprets Mixed Inflation Signals in Mid-2026
Lucas and Luna break down the Fed's current puzzle: headline CPI is falling while core PCE is edging up. They examine why the Fed watches the PCE more closely than CPI, how import prices from China are muddying the inflation picture, and what the latest data means for the interest rate path. With the Fed funds rate at 3.63 percent and the ten-year yield at 4.60 percent, the hosts explain the diverging signals and the Fed's likely response through the rest of 2026. #FederalReserve…
The Unwinding of the Fed Balance Sheet and Reserve Scarcity
Episode 125 of the Federal Reserve Podcast with Fexingo examines a quiet but consequential shift in monetary policy: the Fed's ongoing balance sheet reduction, or quantitative tightening, and its potential to create reserve scarcity in the banking system. With the effective federal funds rate at 3.63% and interest on reserve balances at 3.65%, the gap is razor-thin—signaling that reserves are getting less abundant. Hosts Lucas and Luna explore recent data from the Fed's weekly H.4.1 release…
How the Fed Reads the World Cup Economic Boost
The World Cup gave bars and restaurants a much-needed boost, but the Fed's Beige Book suggests consumers are flashing warning signs. In this episode, Lucas and Luna unpack what the sports tourism surge really tells us about the broader economy—and why the Fed can't ignore the noise. They look at the surprise gain in import prices from China, the unexpected decline in wholesale prices, and how these data points complicate the rate path. With the Fed funds rate flat at 3.63%, the question is…
How Import Prices from China Are Distorting the Feds Inflation Data
In Episode 123 of The Federal Reserve Podcast, Lucas and Luna dig into a surprising data point that has the Fed's attention: import prices from China hit their highest level since 2008, even as overall inflation is cooling. They explore how this one channel is complicating the central bank's read on the economy, why it's not triggering a rate hike, and what it means for the inflation outlook through the rest of 2026. With wholesale prices deflating and core PCE still sticky, the hosts break…
What Falling Core CPI Means for the Fed Rate Path
The June CPI report showed core inflation slipping slightly, but the Fed is watching a more stubborn measure: the supercore services index, which excludes housing. Lucas and Luna break down why the Fed is laser-focused on the cost of haircuts, auto repairs, and hotel rooms—and how that data is shaping the rate outlook for the second half of 2026. They discuss the latest import price surprise from China, the 10-year breakeven inflation rate ticking up, and what the FOMC's July meeting might…
How Import Prices From China Are Distorting the Feds Inflation Picture
China's import prices just hit their highest level since 2008, even as wholesale prices in the U.S. are falling. Lucas and Luna unpack why the Fed can't ignore this contradiction: when cheap Chinese goods get more expensive, the disinflationary force that helped cool core goods inflation for two years starts to reverse. They walk through the June PPI data, the 10-year breakeven rate ticking up to 2.24 percent, and what it means for the rate path through year-end. If you've wondered why the FOMC…
Why the Fed Is Watching Import Prices From China
Episode 120 of The Federal Reserve Podcast with Fexingo. Lucas and Luna drill into a surprising data point from July 2026: import prices posted a surprise gain, with costs of goods from China hitting their highest since 2008. They explore why the Fed, which has been focused on domestic services inflation and wholesale deflation, now has to factor in a resurgent imported goods channel. How does this complicate the rate path when the Fed funds rate sits at 3.63 percent and core PCE is creeping…
What Wholesale Deflation Means for the Fed Rate Path
In Episode 119 of The Federal Reserve Podcast with Fexingo, Lucas and Luna examine Wednesday's unexpected 0.3% drop in wholesale prices and what it signals for the Fed's next move. With CPI and core PCE both showing inflation stickiness in services, the hosts drill into why producer-price deflation might matter more than headline consumer numbers right now. They connect the data to the Fed's real-rate framework, discuss whether the wholesale cooling is durable or just energy noise, and explain…
Why the Fed Is Watching Wholesale Prices Deflate
Episode 118 of The Federal Reserve Podcast explores why the Fed is closely monitoring the unexpected decline in wholesale prices. Lucas and Luna discuss the 0.3% drop in the Producer Price Index for June 2026, driven by a sharp fall in gasoline prices, and what this signals for future Fed rate decisions. They connect this to the latest CPI data showing 3.5% annual inflation, and examine how disinflation in the pipeline could ease pressure on the Fed, even as geopolitical risks and services…
Why the Fed Is Watching the Services Sector for Inflation Clues
Episode 117 of The Federal Reserve Podcast dives into a key inflation signal the Fed is monitoring closely: services-sector pricing power. With the June CPI coming in at 3.5% annually, down from 3.8% in May, the headline number looks good. But Lucas and Luna explain why core services excluding housing — the so-called 'supercore' — remains sticky around 4.2%, driven by labor-intensive industries like healthcare, hospitality, and auto repair. They reference fresh data from the Atlanta Fed's Wage…
The Fed Is Watching Wholesale Prices Deflate
In this episode of The Federal Reserve Podcast, Lucas and Luna examine why the Fed is paying close attention to the unexpected 0.3% decline in wholesale prices for June 2026. With consumer inflation cooling to 3.5% and the 10-year breakeven rate dipping to 2.25%, the hosts explore whether deflationary pressures in producer prices could signal a faster path to rate cuts. They discuss the implications for the Fed's dual mandate, the risk of overreacting to volatile energy components, and how the…
What Falling Core PCE Tells Us About the Fed Rate Path
The June CPI data landed softer than expected, but the Fed's preferred inflation gauge—core PCE—is still running hot. Lucas and Luna dig into the divergence between CPI and PCE, explaining why the Fed trusts the latter more, and what the latest 2.25% breakeven rate signals about market expectations. They connect the dots to the yield curve, the Fed funds rate stuck at 3.63%, and what it all means for the odds of a September cut. Plus, a candid moment about how listener support keeps the podcast…
What the Falling PCE Tells Us About Fed Policy
Lucas and Luna dig into the latest PCE data to explore why the Fed is shifting its focus from CPI to the Personal Consumption Expenditures price index. With CPI easing but PCE still rising, they break down how the Fed uses PCE to gauge inflation trends, why core PCE matters more than headline, and what the flat interest on reserve balances signals about rate policy. They also discuss how 'funflation' is distorting consumer behavior and complicating the Fed's job. A data-driven look at the Fed's…
Why the Fed Is Watching the Breakeven Rate Spread Now
Episode 113 of The Federal Reserve Podcast with Fexingo. Lucas and Luna drill into a specific signal the Fed is watching closely in July 2026: the spread between the 2-year and 10-year breakeven inflation rates. With the 2-year breakeven at 2.26% and the 10-year at 2.26%, the flat term structure of inflation expectations is unusual historically. They explore what this means for Fed credibility, the risk of de-anchoring, and why the flatness matters more than the level alone. Anchored to current…
Why the Fed Is Watching the PCE Over CPI Now
Episode 112 of The Federal Reserve Podcast with Fexingo digs into a subtle but critical shift in how the Fed reads inflation. While headline CPI still grabs headlines, Lucas and Luna explain why the central bank's preferred gauge — the personal consumption expenditures price index, or PCE — is telling a different story. With core CPI at 336.1 and core PCE at 130.1, the gap between them has widened. This episode explores why PCE matters more for rate decisions, how it accounts for substitution…
How Funflation Is Reshaping the Feds Interest Rate Calculus
Lucas and Luna dive into the latest inflation data and how the 'funflation' phenomenon—rising costs for entertainment, dining out, and experiences—is complicating the Fed's path to its 2% target. With CPI and PCE both ticking up in May, and the 10-year breakeven inflation rate holding above 2.2%, Lucas explains why the Fed can't ignore the shift in consumer spending toward services. They discuss how this 'funflation' is keeping inflation sticky, even as goods prices moderate, and what it means…
How Funflation Is Reshaping the Feds Inflation Battle
In this episode of The Federal Reserve Podcast, Lucas and Luna examine the 'funflation' trend — where the cost of at-home experiences like streaming, delivery, and gaming is rising faster than headline CPI. With the 10-year breakeven inflation rate ticking up to 2.24 percent and core PCE still elevated, they ask whether the Fed should care that staying in is no longer the cost-saver it used to be. Lucas breaks down new data from the Bureau of Economic Analysis showing that 'home entertainment'…
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