Fed's Waller: "People said tariffs are going to cause a bunch of inflation. It ain’t happening."

Waller Signals December Rate Cut — But January Holds Uncertainty

Waller indicated that a quarter-point rate cut at the Fed’s December 9–10 meeting is “appropriate,” citing ongoing labor-market weakness and cooling inflation.
However, he emphasized that January will bring a flood of delayed economic data due to the 43-day government shutdown, making further cuts that month more uncertain.

In other words: markets may be gearing up for a dovish signal next month, but investors can’t simply assume it continues beyond that meeting.

Why This Matters for Markets

• Fixed-income: A December cut supports bond bulls now, but if January action cratered by stronger data, yields could spike.
• Equities: Rate cuts generally boost growth stocks; yet if the Fed pauses afterward, the reflation trade may lose steam.
• Volatility risk: When policy path shifts from “cut cycle” to “meeting-by-meeting,” uncertainty rises — and options demand often jumps.

Options-Market Angle: What Flow Traders Watch

Structural shifts in Fed policy tend to show up early in options market flows.

Tickers to Monitor via Unusual Whales

• SPY (SPDR S&P 500 ETF)
  Why: Broad equity exposure; sensitive to rate-cut expectations and growth vs. value rotation.
• T-LT (iShares 20+ Year Treasury Bond ETF)
  Why: Long-duration bond exposure; rate-cut signals drive price, while pauses risk yield surge.
• IEF (iShares 7-10 Year Treasury Bond ETF)
  Why: Intermediate-duration hedge; flow often precedes macro policy shifts.

Flow signals to watch

• Put sweeps in SPY if traders anticipate that the cut is already baked and “what if January stalls?” becomes a risk.
• Call blocks in long-duration bonds (ILT/IEF) ahead of December — a hedge if yield drops further.
• IV spikes in asset-classes sensitive to rate-policy risk when Fed’s data backlog becomes headline.

The Bottom Line

Waller’s language signals a likely cut in December, which markets have largely priced in — but his emphasis on January uncertainty flips the narrative.
For traders: the signal isn’t just “cut yes/no,” it’s cut, then pause. Flow actions will likely come before the broader market registers the shift.

Sign up for Unusual Whales to track real-time options flow, dark-pool prints, and macro-policy rotation.
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