Yellen: I don't talk to Secretary Bessent. He has undone everything I worked on at Treasury. Bessent: "I couldn't even tell you what Secretary Yellen's China policy was, aside from consuming beer and mushrooms." via @bobdavis187

Inflation expectations declined to pre-Liberation Day levels in the University of Michigan survey though still remain well above the December 2024 level. Year-ahead expectations dropped to 4.4% in the preliminary July survey (5% in June) Five-years-ahead fell to 3.6% (prev 4%)

“This is not really a fight about building costs, it is a fight about Fed independence,” The Wall Street Journal chief economics correspondent @NickTimiraos says on rumors that President Trump was planning to replace Fed Chair Jerome Powell.

No pickup in seasonally adjusted initial claims for unemployment benefits last week. Continuing claims continue to point to a slightly less tight labor market compared to a year ago.

Kevin Warsh is asked by @BeckyQuick if the next Fed chair is going to be indepedent. Warsh: "In a word, yes. I’ve strongly believed for 20 years, and history tells us, that the independent operations in the conduct of monetary policy is essential."

Piper Sandler's Andy Laperriere: "It's hard to know when this will matter to financial markets but the politicization of the Fed we are witnessing is a monumental development." "While we would not argue the Fed has been pure as the driven snow for the past 60 years (and certainly made plenty of mistakes), the turn we are witnessing is a consequential break."

Senate Majority Leader John Thune said markets want an independent Federal Reserve that isn't subject to political whims and suggested firing Powell could be damaging to financial markets. From a Wednesday interview on Fox: BAIER: President Trump asked House Republicans on Tuesday during a meeting in the Oval whether he should fire the Federal Reserve chair, Jay Powell. They expressed approval. So as the head of the Senate Republicans, do you think the President should fire the Fed chair? What do you think that would do? THUNE: Well, I think that ultimately the president probably will make that decision based on what he thinks the market, how the markets will react. BAIER: How do you think they would react? THUNE: I think the markets want an independent Federal Reserve. I think they want a central bank that isn't subject to the whims of politics. There is an argument and a very compelling one with respect to the policies that the chairman has put out there. And I think that's what the president and many people around the country are responding to. But ultimately he's going to serve out a term and there will be a new Fed chairman. So my assumption is based on what the President said today, that he's not going to do anything about this anytime soon.

Trump's latest Fed attack is playing out in the court of public opinion—not a court of law. An institution that depends on credibility is defending spending choices on buildings, issues with greater salience than the arcane details of rate policy.

Dallas Fed's Lorie Logan: "My base case is that we'll need to keep interest rates modestly restrictive for some time" But "it's also possible that some combination of softer inflation and a weakening labor market will call for lower rates fairly soon."

UBS: Seasonal adjustment flattered the June core CPI reading. Excluding the pandemic-era years (2020-22) from the seasonal adjustment calculations, we estimate that the seasonally-adjusted monthly core CPI change would have been around 9bp higher than what was published today.