iiinova — where your digital self keeps evolving

Matt Peterson @mattpeterson.bsky.social · 1h

The theme of this piece is what Bloomberg describes as "a decades-long pattern of tactical fabulism" by Andreessen.

Matt Peterson @mattpeterson.bsky.social · 7h

Sometime in the next few days we're going to get official confirmation of this year's $2 trillion deficit. With the 10-year stuck above 5%, we're getting just a teeny tiny taste of what a debt crisis would look like. I ran the numbers in this new piece.

cnbc.com

Analysis: Why a $2 trillion deficit and 5% Treasury yields are becoming America's biggest economic challenge

Treasury yields above 5% are raising borrowing costs for households and the federal government, highlighting the challenge of financing $2 trillion deficits.

214136

Matt Peterson @mattpeterson.bsky.social · 14/10/2026

No resolution on the Cook hearing date. White House acknowledges the pushback from Cook's lawyers, who say she'll be in Europe on Nov. 5, but don't engage with my colleague Kevin Breuninger on whether they're going to move the hearing to accommodate her. As far as we know it's still on for Nov. 5.

cnbc.com

Lisa Cook lawyer doubts Trump committee's fairness as president calls her 'automatic no vote'

White House spokesman Matthew Middleton said in response to Cook's lawyer that Trump "is performing his constitutional duty."

030

Reposted by Matt Peterson

Julia Coronado @jc-econ.bsky.social · 14/10/2026

This is NOT the have your cake and eat it too tech boom of the 1990s (for the umpteenth time), this is a resource intensive, dirty, industrial boom requiring massive infrastructure buildout

1304

Matt Peterson @mattpeterson.bsky.social · 14/10/2026

Traders' bets on an October rate hike are now 50-50. It was closer to 80% hold before CPI. That tells you a lot more about how hard it is to interpret the Warsh Fed than what the Fed is actually likely to do.

091

Matt Peterson @mattpeterson.bsky.social · 14/10/2026

Any hawkish nudge from Warsh Thursday evening will send bets on an October hike skyrocketing. In theory he's sticking to no-forward-guidance. In practice he had Jackson Hole to guide the market before September, and another chance now ahead of October. We'll see if he uses it.

171

Matt Peterson @mattpeterson.bsky.social · 14/10/2026

If Warsh was primed personally to hike in October — and that's my best guess — hotter-than-expected CPI data gives him strong ammunition to try to move the rest of the committee along with him. I doubt CPI would change his view either way. The important variable here is political capital.

351

Reposted by Matt Peterson

Kristian G. Andersen @kgandersen.bsky.social · 13/10/2026

This is the worst news I have heard in a very long time - what a tragic loss. @helenbranswell.bsky.social was, unquestionably, _the_ best in the field and just a wonderful person. Condolences to her family and colleagues - she'll be sorely missed. www.statnews.com/2026/10/13/h...

statnews.com

Helen Branswell, whose reporting on infectious diseases and public health drew acclaim, dies at 69

Helen Branswell, STAT's infectious disease reporter who earned the respect of experts and public health officials with her accessible, prescient dispatches, has died at age 69.

16492109

Matt Peterson @mattpeterson.bsky.social · 07/10/2026

If you’re an average college student, the 10-year Treasury hasn’t been this high in your lifetime. It’s at levels not seen since 2002. This is a blow to a generation that is already set to struggle with housing affordability.

A chart of the 10-year US Treasury, with a blue line rising to 5.339%on the chart. Yellow text says it is a new 52-week high today.

822529

Matt Peterson @mattpeterson.bsky.social · 06/10/2026

Exclusive: The Fed is being urged to cut off Hong Kong's access to the Fed's FIMA repo facility, a dollar-liquidity lifeline. The Fed says it is looking at the letter from the chair of the House China committee.

cnbc.com

House China committee chair urges Fed to review Hong Kong’s access to dollar lifeline

Rep. John Moolenaar wants the Fed to rethink Hong Kong’s access to a dollar-liquidity facility as China promotes the renminbi as a global currency.

092

Matt Peterson @mattpeterson.bsky.social · 02/10/2026

Well. He tried once, got blocked by the Supreme Court, then said he was thinking about trying again. so I dunno.

030

Matt Peterson @mattpeterson.bsky.social · 02/10/2026

That said, the Trump v. Fed story isn't over, in particular because he is still threatening to fire Lisa Cook. But it's very hard to see how that would succeed. I think we're entering a new era in the Trump-Fed story. We'll see how it plays out. ~fin~

162

Matt Peterson @mattpeterson.bsky.social · 02/10/2026

Bottom line: The IG report reads like it's scolding the Fed, and sure, it describes a bureaucratic mess and a very expensive project. But in reality it leaves very, very little for Powell's critics to attack him over, and certainly a very weak case to put in front of skeptical SCOTUS justices.

172

Matt Peterson @mattpeterson.bsky.social · 02/10/2026

The IG makes some hay of the idea that the Fed should have insisted on a guaranteed maximum price. But the IG asked a contractor what would have happened if it did, and the contractor says, oh, yeah, we would have jacked up the price to account for the uncertainty. Again, it's in the footnotes.

60 After reviewing a draft of our report, the CMc noted that this statement was in response to a hypothetical question about whether the contract value could have been established in 2022. The CMc further noted that an earlier GMP likely would have been higher, potentially significantly so, because the design was incomplete and market conditions remained uncertain.

141

Matt Peterson @mattpeterson.bsky.social · 02/10/2026

But the exoneration goes on! Yes, the report finds that costs went way up and suggests alternative processes. But the IG acknowledges — you'd miss it, it's in a footnote! — that even if the board did what the IG suggested, there's no guarantee it would have saved money.

6 While a well-managed CMAR contract and the setting of a GMP provides greater cost certainty and reduced risk for the owner, it does not necessarily mean the project’s overall cost will be lower than if a different well-managed construction method were used. That depends on a variety of factors, including any risk premium included in the negotiated GMP, whether any contingencies in the GMP agreement are triggered, and the owner’s ability to limit design changes or modifications once construction begins.

131

Matt Peterson @mattpeterson.bsky.social · 02/10/2026

The IG's report makes it very difficult to blame Powell personally for the cost overruns. It found that the board as a whole voted for the project and then delegated responsibility to the staff. That's how the Federal Reserve Act was designed. It doesn't expect economists to be project managers.

Consistent with its authority under the Federal Reserve Act, the BOG has delegated most of its administrative functions to Board staff and therefore did not engage in day-to-day management of the renovation project.78 Indeed, we would expect the BOG to delegate the day-to-day management of a large construction project. The BOG’s project responsibilities were limited to approving the purchase of 1951, the long-term strategic space plan, and the annual renovation budgets. The CBA, which is a BOG advisory body, served in an advisory role for the renovation project and did not have any project-level decisionmaking responsibility. MGT meetings with the CBA were high-level information sessions that provided periodic updates about the renovation project’s status. The administrative governor, who chairs the CBA, plays a key role in preparing the annual budget for the BOG’s consideration and has an awareness of certain change events when escalated in the RACI matrix. However, the administrative governor’s advisory role was limited by the narrow set of circumstances that triggered the RACI matrix’s escalation requirements, as described below.

141

Matt Peterson @mattpeterson.bsky.social · 02/10/2026

The report said right out of the gate that it found no "reasonable grounds to believe that a violation of federal criminal law had occurred." The IG didn't just look at the construction project itself but also at Powell's much-criticized Senate testimony in which he supposedly lied. No crime.

131

Matt Peterson @mattpeterson.bsky.social · 02/10/2026

Having spent quite a bit of time with the Fed IG's report, I think it was easy to miss how thoroughly it exonerated Powell, despite the bold takeaways that it found evidence of mismanagement of the project. Couple thoughts... oig.federalreserve.gov/reports/boar...

oig.federalreserve.gov

OIG: Federal Reserve: Evaluation of the Eccles-1951 Renovation Project Management and Construction Costs

We undertook this evaluation to assess the Board’s oversight of the Eccles-1951 building renovation project and the construction costs associated with it, which have more than doubled

141

Matt Peterson @mattpeterson.bsky.social · 02/10/2026

The DOJ says it is not reopening the Powell investigation. The White House is not calling for Michael Barr to be fired over the SVB allegations. However, as of Thursday the White House told me that *is still considering* firing Lisa Cook. www.cnbc.com/2026/10/02/d...

cnbc.com

DOJ says it will not reopen criminal probe into former Fed Chair Powell

2136

Matt Peterson @mattpeterson.bsky.social · 02/10/2026

Very good Crisis Group briefing makes the point that the Hormuz shuttle runs that have more allowed oil out of the strait may prompt Iranian attacks to reassert control. "Good news for energy markets today – more tankers through Hormuz – may herald new risks of Iranian escalation tomorrow"

crisisgroup.org

Five Energy Market Factors That Could Tip the Scales in the Middle East War | International Crisis Group

Oil, gas and fuel prices are central to the U.S.-Israeli war with Iran, with Washington striving to lower them and Tehran to keep them high. With both sides determined to prevail, five market-shaping ...

041

Matt Peterson @mattpeterson.bsky.social · 01/10/2026

Your regular reminder that Trump has *already* appointed four out of seven members of the Fed's Board of Governors: Bowman, Powell, Waller, and Warsh. He just doesn't like some of them.

081

Matt Peterson @mattpeterson.bsky.social · 01/10/2026

Trump says there are Obama appointees at the Fed. There are not.

Do you regret nominating Warsh?

Well, he's controlled to a certain extent by the board. You know, you have Obama and Biden picks on there. You’re too late on that. Too late. We have Lisa on there. We have a lot of—

He still has your confidence?

We have a lot of people on there that would love for our country to do badly. It's become very political. I don't blame you, Kevin. I think it's too bad. Not fair. Look, our nation is going through a growth explosion like no nation's ever seen. We're blowing through the interest rates. But if we didn't have to, it would be great.

1101

Matt Peterson @mattpeterson.bsky.social · 30/09/2026

That said, Judge Boasberg was very skeptical of Pirro’s motives the first time around. No reason to think the court would be friendlier to her this time.

020

Matt Peterson @mattpeterson.bsky.social · 30/09/2026

Pirro’s office tells me it is reviewing the Fed IG’s report. This has always been the crucial point about it. Pirro wouldn’t commit to only reopening the investigation if the IG found criminality. She can use her own standard.

120

Matt Peterson @mattpeterson.bsky.social · 29/09/2026

"US households are suffering from the price of things, not the price of credit," @sheilabair.bsky.social writes. "Instead of criticising the Fed, Republicans should celebrate the fact that it has made the living costs of Main Street America its top priority."

ft.com

For once, the Fed has put Main Street before Wall Street

Rather than criticising the central bank’s rate increase, Republicans should be praising Warsh for putting American families first

082

Matt Peterson @mattpeterson.bsky.social · 28/09/2026

Breaking: David Zervos will join Scott Bessent's Treasury Department as a counselor. Zervos was a CNBC contributor. He adds intellectual firepower to a department that has seen many recent personnel departures.

cnbc.com

Treasury Secretary Scott Bessent hires Wall Street economist David Zervos

Zervos is joining the Treasury Department as counselor to Bessent, adding a prominent markets voice to the administration's economic policy team.

131

Matt Peterson @mattpeterson.bsky.social · 25/09/2026

Warsh can't move on the balance sheet, or other parts of his regime-change agenda that require board or FOMC majorities, until inflation gets fixed. So he is moving aggressively to force inflation down, for now with a unanimous FOMC. I expect a big push across on the board on regime change in Q1.

052

Matt Peterson @mattpeterson.bsky.social · 25/09/2026

Warsh in an ideal world might want to tighten by cutting the Fed's balance sheet. In fact that's arguably his longest-held ambition for the Fed. He's been arguing for it since his first stint as a governor ended in 2011. So it's striking that balance sheet cuts aren't on the table — yet.

Now, back and in control of the Fed’s agenda, Warsh finds himself unable to quickly follow through on his plans for balance sheet cuts, even though that could in theory have taken more accommodation out of the economy. The FOMC’s minutes for July show other voters were reluctant to move quickly toward cutting the balance sheet, preferring to wait for Warsh’s task forces to report back.

The state of the economy and the markets also may have complicated Warsh’s plans. With inflation above the Fed’s target and oil surging, the committee had an immediate need to address prices, making it the wrong time to experiment with whether Warsh was right that cutting the balance sheet would meaningfully restrain the economy.

141

Matt Peterson @mattpeterson.bsky.social · 25/09/2026

Warsh said he was removing a "dose of accommodation." He sees a two-tier system for credit creation: The Fed at the top end, and the banks and other private-sector financial institutions at the bottom. He is shifting that top tier toward a more restrictive policy, but the bottom end is still loose.

In his Jackson Hole speech, Warsh said he was watching a suite of indicators for monetary expansion including credit spreads, the Fed’s Senior Loan Officer Opinion Survey, which gauges the willingness of banks to lend, and credit availability and demand. His conclusion? Money is easy.

“That helps explain the growth we’ve seen this year in those loans,” he said. “Credit and loan markets are showing few signs of policy restraint.” Easy credit conditions would not necessarily require rate hikes. In Warsh’s formulation, the central bank could need to lean against a private credit system making credit too easy when inflation is running above target.

121

Matt Peterson @mattpeterson.bsky.social · 25/09/2026

Some takeaways from my new piece with @steveliesman.bsky.social. Warsh's new framework for setting interest rates is starting to become clear. It puts a lot of weight on financial conditions. As the market has sussed out in the past few days, that points toward more hikes while inflation stays hot

cnbc.com

Warsh's regime change at the Fed pushes ahead – and meets resistance

Fed Chairman Kevin Warsh is driving rapid change in some areas, while his emerging policy framework suggests further rate hikes remain possible.

194

Matt Peterson @mattpeterson.bsky.social · 24/09/2026

The policy tension behind the rise in bond yields: Kevin Warsh wants to hear what markets are saying. Scott Bessent wants to use his tools to change the message when he believes it’s wrong.

cnbc.com

Analysis: Higher Treasury yields deliver a reality check on a hot, inflation-prone economy

Elevated Treasury yields will complicate both Federal Reserve policy and Treasury financing.

040

Matt Peterson @mattpeterson.bsky.social · 21/09/2026

"Russia has not commented on Trump’s efforts to secure an energy ceasefire. Vladimir Putin... is unlikely to agree before the end of this coming winter, when his forces are planning a devastating aerial bombardment of Ukraine’s energy infrastructure, according to people briefed on his thinking."

ft.com

Donald Trump presses Volodymyr Zelenskyy to stop hitting Russian refineries

US president tells Ukrainian leader in phone call it is all about ‘diesel, diesel, diesel’, according to officials

071

Matt Peterson @mattpeterson.bsky.social · 21/09/2026

You can sign up for a free account, but... yeah.

110

Matt Peterson @mattpeterson.bsky.social · 21/09/2026

Starling, the firm retained by Fed regulatory chief Michelle Bowman, has released its initial report into the SVB failure. It is 300+ pages, including supporting documents, so it will take time to review. One bit of news off the bat: Michael Barr did not sit for an interview with Starling.

A screenshot with the following text: "Starling has benefitted by interviews with those entrusted with the duties of the VCS: former
Governor Daniel K. Tarullo, former VCS Randal K. Quarles, and current VCS Michelle W. Bowman. Governor Barr, who served as VCS during the nine months immediately prior to SVB’s failure, declined to meet for an interview discussion until after having opportunity to respond to written questions. I appreciate Governor Barr’s responses to an initial set of questions, his willingness to respond to a more detailed second set of questions recently submitted, and I look forward to an interview discussion with him that is to be scheduled thereafter."

153

Matt Peterson @mattpeterson.bsky.social · 21/09/2026

Treasury Secretary Scott Bessent on CNBC declines to join some of his colleagues' attacks on the Federal Reserve under Kevin Warsh. "We are sure he will do the right thing to balance the growth mandate with the inflation mandate," Bessent said. (The Fed has a jobs mandate, not growth.)

082

Matt Peterson @mattpeterson.bsky.social · 20/09/2026

Useful history in the WSJ: State-run investments in refineries in Russia and the Middle East made it less profitable to add capacity in the US. Now those state-run facilities are under attack, and the private sector can't meet demand on its own. Diesel is at $6.50. www.wsj.com/business/ene...

The major refinery investments have had a knock-on effect: They put pressure on refining margins across the U.S. and Europe. Western oil companies haven’t built new refineries in nearly 30 years, while more than a dozen facilities across the U.S. and Europe have shut down since 2015.

When national oil companies built the refineries, return on investment was a secondary concern, said Alan Gelder, senior vice president of refining, chemicals and oil markets at the consulting firm Wood Mackenzie. Governments paying for them were more interested in providing employment and assuring fuel security.

“We’ve seen the oil majors effectively reduce their exposure to that sector because the returns on actual capital employed have been poor,” Gelder said. “The classic phrase we used was: ‘How do you make a small fortune? Take a large fortune and build a refinery.’”

0115

Matt Peterson @mattpeterson.bsky.social · 20/09/2026

How (not) to talk about economics in China. www.nytimes.com/2026/09/20/b...

A screenshot of a New York Times article with the following text. The third sentence is highlighted.

Fixed-asset investment, including infrastructure, real estate and equipment, fell 4.1 percent in the first five months of the year. Mr. Li, the former central bank adviser, said a similar contraction happened only twice in the history of the People’s Republic: in 1961, at the height of the Great Famine, and in 1967, at the height of the Cultural Revolution. (It also fell in 1989 following the Tiananmen Square massacre, but it probably wouldn’t be wise to mention that at a meeting in Beijing.)

063

Matt Peterson @mattpeterson.bsky.social · 17/09/2026

Diesel’s up 8.5 cents today. 4 cents yesterday. Up 72.5% in a year, and the rate of price increases is accelerating. Brutal.

712212

Matt Peterson @mattpeterson.bsky.social · 17/09/2026

Maybe. But he nonetheless told Cook last month that he was (again) considering firing her.

060