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Hey Fed, You’re Worried About Credibility? You Have No Credibility

Originally posted at Capitalstool. Join the conversation.

My analysis of the bond market has been bearish since August 2020. I have repeatedly written that every rally was a gift, an opportunity to bondholders to GTFO. The recent rally has been no different than those which preceded it in that regard.

Yesterday it seems to have made the turn for the next upleg in yields.  The 10 year Treasury yield bounced hard off of its 100 day MA, after making a slightly higher low than the May low.

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Meanwhile the Fed is, as usual, massively behind the curve. Not just behind the inflation curve, but massively behind the curve in its ratification of market interest rates every 6 weeks.

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The Fed worries about its inflation fighting credibility. It has no credibility. The evidence shows that consumers are already spending like there’s no tomorrow, in their efforts to stay ahead of inflation. Unfortunately, they are right. There is no tomorrow. Might as well enjoy today and buy that air conditioner now, rather than waiting for that end of summer sale.

 

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