PakGazette – Renowned commodities trader Peter Brandt has shared a thread of tweets published by The Kobeissi Letter, an entity that provides top-level expert commentary on global capital markets and developments in them.
Kobeissi’s letter revealed an important development regarding the Federal Reserve’s recent actions in managing inflation and, in particular, interest rates. He says that, basically, we are now witnessing “the largest market disconnect from the Fed in history.”
Legendary trader Brandt directed a major criticism at the US central bank and its chairman Jerome Powell, making a comment in the aforementioned thread.
Peter Brandt tweeted: “The Federal Reserve and its weak chairman and forward-looking guidance will go down in history for their blunders.”
US inflation continues to grow
In the thread, Kobeissi’s letter addressed a significant disconnect they are seeing occurring between the recent policy actions taken by the Federal Reserve and the way the markets have reacted to them.
Notably, the band claims that “the 10-year bond yield has now risen 100 basis points since the ‘Fed pivot’ began in September,” meaning that the 10-year Treasury bond yield years that help the US government borrow money, increasing the national debt has skyrocketed. The thread also discusses significant increases in inflation indices such as core CPI, PCE, PPI, and headline CPI.
Treasury yields are currently at the highest level since May of this year, despite the Federal Reserve aggressively cutting interest rates. One of the side effects here, according to Kobeissi, is the impact on the housing market: “Buying a home with a median price of $420,400 now costs an average of ~$400 more PER MONTH.”
The main reason interest rates are rising while the Federal Reserve cuts them, the thread insists, is that “the markets have realized that inflation has risen again.”
reacts to Jerome Powell’s recent announcement
In December, the world’s largest cryptocurrency, Bitcoin, fell below the recently reached price level of $100,000. This price reversal came after Federal Reserve Chair Powell announced that the Fed intends to tighten monetary policy again next year.
This gave markets a signal that there could be a potential return towards higher interest rates, meaning less liquidity for the markets and for risk assets, such as Bitcoin and gold, in particular.
