Show Notes
Oil near $100, copper at a record, and the Fed still says 2%. Why the bond market breaks before the stock market does.
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Oil near $100, copper at a record, and 65 straight months above 2%. Peter says the bond market breaks first.
Brent touched $99.50 and copper hit an all-time high, and Peter's point is that the Fed's 2% target was already unreachable when oil was falling. Sixty-five months above target, and now the inputs are rising again. PPI Thursday and CPI Friday could both come in hot, and if they do, the damage shows up in bonds before it shows up in stocks. The market is pricing roughly 60% odds of a hike next week. Peter doesn't think the Fed will do it, and thinks 25 basis points wouldn't matter if it did, since the market would immediately start pricing the next one.
The rest is the bill coming due elsewhere. China just posted a record trade surplus, with August exports up 25% year over year and exports to the US up 34%, which is what happens when tariffs price Americans out of the best deal rather than moving production home. Peter got the receipt himself: the courier billed him for the tariff, then billed him again to process it. Meanwhile the hyperscalers that used to park cash in Treasuries are borrowing from the same pool the government needs, at a moment when interest costs already run $1.2 trillion a year.
Chapters: 00:00 Intro 00:39 War Shock Fuels Commodities 02:15 Copper vs Gold Real Money 06:11 Iran War Drags On 21:31 Tariffs and Trade War Fallout 30:18 Producers vs Consumers 31:50 Tariffs Shift Trade 35:52 Why Trade Wars Fail 43:37 Nickels Beat Treasuries 50:59 Fed, Inflation, and Wrap-Up
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