To The Moon

$NASDAQ(.IXIC)$ The higher the rates, the smaller the window of opportunity. It appears that when caught in a bind between (a) raising rates moderately to maintain financial stability but risk accelerating inflation, or (b) raising rates aggressively to stabilise inflation but hastening a recession, the US Federal Reserve had unequivocally chosen the latter. The catch for this approach is that the faster and higher the rates environment shifts, the quicker the subsequent contraction that comes, which eventually negates the need for higher rates. As such, yield investors should note that higher rates may only be on a limited time offer basis. Debt sustainability concerns of the UK. As we had observed, this high rates/rapidly tightening financial conditions dynamic had already claimed a non-trivial victim in the UK. The Truss administration pursued a new economic agenda of tax cuts funded by tens of billions of additional borrowings, aggravating concerns of debt sustainability with rates already uncomfortably high. This led to the collapse in the value of the pound against the dollar, and 30Y Gilt yields soared to their highest levels in 20 years, raising solvency concerns among UK pension funds. This forced the Bank of England to restart an emergency bond buying programme – cooling all expectations of policy tightening just months after it first embarked on QT. While the US is presently showing more economic resilience than the UK, both exhibit worryingly similar trends of (i) fiscal extravagance, (ii) high and rising debt/GDP, (iii) persistent trade deficits, and (iv) sustained entitlement spending, which suggests that higher rates would invoke similar stresses in the US if overextended; therefore rates should eventually settle lower once the inflation problem is satisfactorily contained. At the moment, the Feds may still be focused on fighting inflation and this may affect stocks and bond yields. I am holding off my purchases at the moment till I gain more clarity. @TigerStars DYODD