Warsh Rate-Hike Trade Collapses, Trump's Tariffs Create Trade Fraud Incentive and More: This Week in Economy
Key economic developments include the collapse of expectations for a September Fed rate hike, now priced at only 25%. Treasury Secretary Scott Bessent stated the U.S. economy is shifting from a 'K-shaped' to a 'C-economy.' Meanwhile, Trump's tariffs are creating incentives for trade fraud, costing billions in revenue. Additionally, Governor Ron DeSantis criticized record budget deficits, and Senator Rand Paul attributed affordability issues to inflation driven by federal deficit and monetary policy.
As the week comes to a close, let’s take a look at some of the most significant stories that shaped the financial world last week.
Fed Interest Rates Outlook: The Warsh Rate-Hike Trade Just Collapsed
Financial markets have been on edge this month, anticipating a potential interest-rate hike by the Federal Reserve under Kevin Warsh‘s leadership. However, the likelihood of a September rate hike has now dwindled to around 25% on Polymarket, down from roughly 60% earlier this month. The market is also beginning to separate the short-term monetary-policy outlook from the long-term structural forces keeping bond yields high.
Read the full article here.
Scott Bessent Says America’s ‘K-Shaped’ Economy Is Dead
Treasury Secretary Scott Bessent declared that the U.S. economy is moving beyond the K-shaped divide. He suggested that a “C-economy” is emerging, with lower-income workers starting to regain ground. This comes amid mixed views from economists and corporate leaders about the health of American consumers.
Read the full article here.
Ron DeSantis Sounds Alarm On Record Budget Deficit
Florida Governor Ron DeSantis (R-Fla.) attributed the failure of the Department of Government Efficiency (DOGE) to Congress’s inability to implement budget reductions. DeSantis criticized the federal government for posting a record July budget deficit of $432 billion, calling it "The failure of DOGE in one sentence."
Read the full article here.
Rand Paul Says ‘Affordability’ Crisis Is Really Inflation
Sen. Rand Paul (R-Ky.) argued that Americans’ affordability concerns are fundamentally an inflation problem. He pointed to the federal deficit and Federal Reserve monetary policy as major drivers of declining purchasing power.
Read the full article here.
Trump’s Tariffs Were Meant To Raise Revenue — Now They’re Creating A ‘Huge Incentive’ For Trade Fraud
President Donald Trump‘s tariffs were initially intended to generate revenue and reshape global trade. However, the higher costs have reportedly created a powerful incentive for companies to find ways around them. The White House is now addressing a growing tariff-evasion problem, which it says is costing the U.S. $19 billion to $26 billion in annual tax revenue.
Read the full article here.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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