Treasury Bonds
“By all means, let’s be open-minded, but not so open-minded that our brains drop out.”
The Fed Won’t Cut Rates This Year. Most economists think they should. (Of course, they do! Most of them work for the government or on Wall Street.) But let’s face it, as calculated by the government, inflation for the average household is up 25% since it started rising in 2021. However, for most households, it feels much higher. The point is that inflation is not going to go down. The Fed doesn’t even want it to! Core PCE is rising at 3.5%, and it’s expected to rise to 4% by the election. The Fed’s stated target is +2%; inflation would have to be negative for a prolonged period to bring any relief to the average household.
“By all means, let’s be open-minded, but not so open-minded that our brains drop out.” Read More »
The Powell Pivot! What a difference two weeks can make.
Wednesday, Fed Chairman Jerome Powell, citing continued progress on lowering inflation towards target and a more balanced labor market, said the Fed was likely done raising rates. Furthermore, he indicated policymakers are beginning to talk about cutting rates.
The Powell Pivot! What a difference two weeks can make. Read More »
“In this new global environment, policymakers, even those previously in the ‘lower forever’ camp…”
Interest rates drive everything, and they are as volatile and directionally uncertain as they’ve ever been. So are the global macroeconomics driving them. Global fund managers are required to make bets on outcomes for stocks, currencies, and commodities based on the cost of money. If perspectives on rates are so dispersed, how can we judge the value of the things that are driven by them?