Tue Nov 1
So the Fed’s favorite curve spread is 10yr Treasuries minus 3mo TBills. They finally inverted along with some other curves. These aren’t short-term indicators but they are setting a stage. Inflation is still on the move worldwide. I suspect we will all be living with inflation for years to come. The Fed may not be able to tame it but they can raise their acceptable level from 2% to say 3 or 4%. I don’t see a pivot in the sense of dropping rates but they could well pause early next year. The next two rate hikes are already baked in. Any dovish language will be bullish. In lieu of any wars or financial implosions, the market could add some upside into year end. Twist will put an artificial floor under long rates. TMF is on my radar. Could a pause be close at hand?
Good trading!
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