LIVE! Lions AND Friend's... DO YOU Want TO BEAT THE FED. AT THEIR OWN GAME? Then Do THIS! Mannarino
From Greg M
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The Federal Reserve is lying to everyone. The promise of any kind of landing does not exist until bond yields cross over the FED Funds Rate. Bond yields are continueing to drop, widening the gap from the FED Funds because the FED is (A) bailing out the banks who have lost billions of dollars in the bond market showing signs of extreme illiquidity, and (B) trying to convince the market that bond yields are pricing in rate cuts, so the market can be propped up from the promise of more "Easy Money", with help from the RREPO market. If yields do not cross over before rate cuts are announced, then the Federal Reserve will be forced to pivot into another hawkish stance, before rates even get close to their objective. The smart money bailed because they know that days like today will continue and the volatility will get worse, when the FED is trying to play a balancing act, and the house of cards are falling apart.
The Ten Year Yield is only 35.5 basis points from where the FED wants the FED Funds Rate to sit in 2024. It seems like it will move to that target before EOY...and this means there is an extremely high probability that the FED will lose all control of bond yield suppression, once it gets to that level. The only way they can take back control, is if they start cutting rates by next meeting, but FED presidents have already said that it won't happen until the middle of next year. They will lose control, because yields will have already priced in the three rate cuts that Powell hinted in his last meeting, but the pricing-in will be 4.5 months in advance. There is too much waiting time for bond yields to start becoming even more inverted than they already are right now, and the Federal Reserve doesn't have enough firepower to revert yields back into any kind of order for a landing. If they cut rates, they will have to raise them again, just so they revert back to they way they need to be.
Greg... I hope you have time to re-charge ur batteries... ur passion is an inspiration for an old guy like me..