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After the president fired the Bureau of Labor Statistics (BLS) commissioner, experts warned that America’s credibility could take an L.
What does this mean?
– The US president fired the commissioner last Friday, claiming the last jobs report was “rigged” against him.
– That’s a serious decision. Think of the BLS as the scorekeeper for the US economy, presenting numbers that influence decisions worth trillions of dollars – from business investments to government policies.
– Just look at the consumer price index (CPI). The inflation indicator dictates the payouts for Treasury Inflation-Protected Securities (TIPS), a type of government-issued bond. And it’s a sensitive process: even tiny tweaks in the methodology can shift CPI by a fraction of a percent – enough to move billions in the bond market.
🔺 Inflation-linked bonds have risen nearly 6% this year, but a controversial hire could turn them from portfolio protectors to problems.
⚠️ See, the $2 trillion TIPS market runs on trust that inflation data is honest and free from political spin. And while the commissioner’s role has historically been apolitical, former heads have warned that the next leader could be pressured to present rose-tinted numbers.
History suggests that when numbers get political, investors hold markets to account. With actions, not words: they might sell the US dollar, ditch American bonds, and buy gold. And just like in a relationship, trust takes years to build and seconds to break. So if investors dump the US of A, they might need a lot of convincing before they reconsider.
