How politics is intruding on Fed policy

Recent U.S. economic data has generally been weakening, as evidenced by the decline in the Citigroup Economic Surprise Index (ESI, gold line), which measures whether economic data is beating or missing expectations. As ESI has been roughly correlated to bond yields, this should put downward pressure on rates and expectations of rate cuts in the near future.

 
Not so fast! Fed policy has become increasingly constrained by politics, both on a short- and long-term basis. Here’s why.

The full post can be found here.