The Fed ultimately has a choice. It can fight the inflation dragon, or it can surrender to inflation and try to keep the debt bubble inflated and the economy tottering onward. It can't do both.
To close, regular readers well-know that because we duly track inflation, we’ve suggested for a couple of years now that the Federal Reserve’s Open Market Committee really should raise their Bank’s Funds rate. Yet finally, some in the trading world also are starting to realize same.
The transformation of the markets from a convenient way to raise capital for production into a type of casino is a warning sign. As is the participation of the masses through outfits like Robin Hood, a broker that democratized gambling, disguising it as speculation or investing. It’s a tip-off we’re probably at a top in the broad market.
As bond yields surge, investors are growing wary of a global spending crunch. High bond yields threaten a severe hit to the spending power of governments, businesses and households.
Technical stock charts on $FNV, $GDXJ, $TECK, $JDST, $GORO and more.
Consider what the bond market is saying. The Fed cut rates. The long bond rose anyway. Before the Fed began cutting in 2024, the 30-year Treasury yield was below the federal funds rate. Today there is a spread of roughly 156 basis points between them. That is not what you normally see after a cutting cycle
