here's the thing. Why in the world is the ultra short fed funds rate higher or about the same as the 3,5,7, year treasury rate? The market has voted with its feet that the economy is slowing and inflation is a non-factor. Sure the market could be wrong. But it doesn't make much sense for an overnight rate to be higher than a 5 year rate decided by the free market.
for the fed to blithely ignore what trillions of dollars is saying and keep raising its rate...that would be major chutzpah. That's why the odds of further rate hikes are so against it happening. The market driven rates are saying the Fed is being too aggressive here.
It seems to me that given strong jobs and strong wages, the broad American economy is doing well, and that's what the Fed should care about. The only part that isn't doing so well is the stock markets because they're pissed higher rates means they'll only get a 1 million dollar bonus check instead of a 2 million dollar bonus check.
I mean, this should be the absolute golden opportunity for the middle class. Strong jobs, strong wages, and affordable stocks to get in on.
not sure what you are saying.
The only reason the fed needs to raise its interest rate is if it thinks inflation is building. that's it. If we can get 10% GDP growth, the fed wouldn't raise rates...if inflation was 2% and falling.
So right now the Fed is deciding if inflation is building. The free market has said 'absolutely not.' The 10 year at 2.6% tells us that. But the Fed has been saying 'absolutely yes.'
So for the Fed to continue to overrule the message from the free bond market and say 'we believe inflation is building and the free market is wrong' would be pretty nutso.