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Difficult to say, there's an argument for both cases. Oil has come off fairly aggressively the last 2 weeks. His gut feeling is that this won't hold.
When the supply/demand balance gets disrupted, very difficult to get things to match again. We're going to have higher energy-price volatility, and he'd expect more upside volatility than downside.
No. When you get a disruption of this magnitude, it has longer-term implications that are difficult to fix with just some statements.
If you look at the Fed's mandate and at what the new chairman echoed yesterday, they've had a 5-year problem with inflation. Their target goal is 2%, and they've exceeded that for longer than 5 years. Yesterday saw a very hawkish tone, and a willingness to take a fresh look at some new data sources.
As there's more onshoring, and if the trade balance were to rightsize more, there's less demand for US treasuries. With less demand comes upward pressure on rates. So inflation plus trying to rightsize the trade deficit are two factors that likely push interest rates up.
Yes. If you look at the largest foreign buyers of US treasuries, and if the US is to have a smaller trade deficit, there's less demand for US treasuries. The trade deficit and the demand for treasuries are tied together.
There is a workaround for the US government if they decide they want to increase their balance sheet, and the Fed alluded to that via one of its working groups. Japan's been doing this for more than 25 years. In the past Warsh has indicated he's not a fan of growing the balance sheet (and that may change). But it would facilitate downward pressure on interest rates.