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Joe Biden talks recession, confusion spreads over Bank of England policy and the chips pain hits Intel. While the Fed raises rates and the e [View in browser]( [Bloomberg]( Joe Biden talks recession, confusion spreads over Bank of England policy and the chips pain hits Intel. `Very Slight’ While the Fed raises rates and the economy slows, President Joe Biden [played down]( recession risks in a CNN interview on Tuesday. He said that if it does happen, he believed it would be "very slight." Meanwhile, Treasury Secretary Janet Yellen appeared [relaxed]( about the relentless strength of the dollar this year, remarking it was the "logical outcome" of different global monetary policy stances. The Fed's position has been the most pronounced, but there are few signs it plans easing back. Cleveland Federal Reserve President Loretta Mester said in a Bloomberg TV interview on Tuesday that she saw ["no reason"]( to alter the Fed's plans to reduce the size of its balance sheet. Credibility challenge Confusion reigned in bond markets as investors struggled to keep up with the Bank of England and the UK government’s policies. Governor Andrew Bailey issued a [rare public ultimatum](at the IMF meeting on Tuesday, saying the central bank will end its emergency gilt purchases as planned at the end of this week. Hours later, the Financial Times reported the BOE briefed bankers that it might keep the program going, citing comments before Bailey spoke. That prompted the central bank to reiterate that [bond purchases will end](on Friday. Gilt yields [whipsawed]( as a result, before ultimately climbing toward multi-year highs seen at the end of September. Separately, the BOE warned in its quarterly Financial Policy Summary report that some UK households may face a [strain over debt repayments]( similar to that seen before the 2008 financial crisis. Earnings watch Chipmakers take center stage as the earnings season rolls closer. Intel is planning a [major reduction in headcount](to cut costs and cope with a sputtering personal-computer market, according to people with knowledge of the matter. The company’s planning to make the move around the same time as its third-quarter earnings report on Oct. 27. Meanwhile, luxury brand LVMH’s sales jumped as the owner of Louis Vuitton and Christian Dior benefited from [wealthy American tourists](splurging on luxury goods in Europe. Markets whipsaw US stocks appear set to snap a five-day losing streak. S&P 500 futures rose 0.8% and Nasdaq 100 contracts climbed 1% as of 5:45 a.m. New York time. In Europe, the Stoxx 600 rose about 0.3% as consumer products, tech and chemicals outperformed. Treasury yields eased off multi-year highs and the dollar was little changed. But the real action this session has been UK markets amid heightened volatility. The yield on 30-year gilts -- favored by investors such as pension funds at the heart of recent market stress -- rose to 5% for the first time since the BOE's intervention in late September. Coming up… It's a busy day for central bank speakers, with voices from the BOE, including Pill and Mann, particularly worth listening to. The ECB's Lagarde is also on the docket, and there's minutes from the Fed's September meeting to interpret. In data, the US Sep. PPI final demand reading is due, leading to tomorrow's inflation numbers. OPEC publishes its monthly oil market report. Earnings include PepsiCo and Aritzia. What we’ve been reading Here’s what caught our eye over the past 24 hours: - Hedge funds paid for [stock-picking genius]( have little to show for it. - Looking for a[Fed pivot](? Watch James Bullard. - David Einhorn says value investing might [never come back](. - Shanghai is [quietly shutting schools, bars]( as Covid returns. - Luxury demand: [crisis-proof or last hurrah](? - Twitter faces [only bad outcomes]( if Elon Musk’s $44 billion deal closes. - “[Bear Force One](” wins Fat Bear Week after drama-filled vote And finally, here’s what Joe’s interested in this morning Yields on UK government bonds are back on the rise today after the [Bank of England confirmed]( that its recent market intervention would come to an end this Friday as planned. Speaking yesterday in DC, BOE chief Andrew Bailey told deleveraging pension funds that they had three days to "get this done", a comment that sent shivers across a range of markets. But enough about the Bank of England and gilts. Let's talk about something else that's totally theoretical and which is definitely not about the Bank of England, gilts, the pound, or the new UK government. A popular idea is that it's important for the central bank of a country to be independent, so that it can make uncomfortable decisions (such as hiking rates) to fight inflation. That's kind of what's going on these days throughout the world. In addition to fighting inflation, central banks also perform a lender-of-last-resort function or market-maker-of-last-resort, ensuring the orderly trade of government bonds. In fact it’s essential that the government bond market operate smoothly so that the transmission mechanism of policy works. A central bank could theoretically abdicate this responsibility and let the government bond market go pear shaped, undermining the government, the financial system, and the overall economy all at once. In theory, the central bank could do this anytime it wants, particularly if it didn't like various policies that the government was enacting, like say tax cuts, spending increases or subsidies. In other words, while we talk a lot about independent central banks, you could make an argument that this arrangement not only makes the bank independent, but also makes it specifically senior in power to the fiscal authorities. After all, fiscal decisions can be undermined by the bank's stance to the market. Perhaps we should also talk, from time to to time, about the importance of fiscal policy independence as well. Follow Bloomberg's Joe Weisenthal on Twitter [@TheStalwartÂ]( Follow Us Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. 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