There’s big news coming out. Kevin Hassett, Trump’s former chief economic advisor—and a top candidate for Fed Chair in 2026—just made a statement.

He said there’s a high probability of a 25 basis point rate cut on Wednesday. More importantly, Powell has finally managed to unify the FOMC’s opinions, and “cautious rate cuts” have become the consensus. When a reporter pressed him on how many cuts there will be in 2026, Hassett laughed and said, “Don’t focus on the number of cuts, just watch the data.”

But the really interesting part came next. He believes AI is creating a supply-side shock similar to the 1990s—pushing inflation down and growth up. What does this mean? The Fed has the confidence to let the economy run a bit hotter, and there’s still significant room for the 10-year Treasury yield to move lower.

In fact, the bond market has already improved this year. The current volatility? Just normal pre-meeting moves.