To The Moon

Stocks rising as bond market senses Fed 'finishing point' - SkyBridge's Anthony Scaramucci

SkyBridge Capital founder Anthony Scaramucci said Tuesday that the recent rebound in stocks has come as signals from the bond market suggest the Federal Reserve is reaching the "finishing point" of its interest rate hikes.

"The bond market is sensing that we're getting to the end of the Fed rate hikes and I think that's why you're seeing a liftoff in these markets," the former Trump administration staffer told CNBC.

Scaramucci argued that recent activity in the TIPS market, which tracks the price of inflation-protected Treasury instruments, points to a declining expectation among investors for long-term inflation. He argued that the implied market expectation for long-term inflation has trended back down towards the Fed's 2% target.

The SkyBridge founder added that policymakers wouldn't want the figure to drop aggressively below 2%, as that might open the door to a potential "deflationary crisis," which he characterized as "one of the worst things that could happen."

Looking to future Fed policy, Scaramucci predicted that the central bank would probably raise interest rates "one more time." He added that the stock market would likely rise following another rate hike of 75 basis points because "that's really the finishing point."

Turning to the crypto markets, Scaramucci said action in the asset class has largely become a risk-on/risk-off trade in recent months. He contended that further regulatory changes were necessary to provide long-term growth in the sector.

"Until the SEC and the CFTC and the legislature moves to create more clarity in the regulation around crypto, it seems like it's conjoined to the Nasdaq and other risk assets," he said.

"At some point, I do predict you'll have a decoupling, but it won't be until you get regulatory clarity," he added.