Show Notes
The Fed hiked a quarter point. Peter explains why it will not stop the bond market, the dollar, or what is already coming for housing.
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The Fed finally hiked. Peter says the quarter point changes nothing about what is already in motion.
The Federal Reserve raised the fed funds rate 25 basis points to 3.75 to 4 percent, a 90 percent probability going in and a unanimous vote coming out. Peter's read is that none of that signals resolve. The Fed did not hike because it wanted to. Months of tough talk had stopped working, the bond market had called the bluff, and the committee was left with a put-up-or-shut-up moment it could not dodge. So it did the smallest thing available, and Kevin Warsh gave the shortest press conference of his tenure on the way out.
A quarter point does not touch inflation heading for a four handle, not with oil above 100 dollars and diesel at record highs. The reason the Fed will not do more is not caution, it is capacity. A hike large enough to break inflation would break the economy and the Treasury's ability to fund itself.
The market understood immediately. The Dow closed down roughly 600 points after being green before the announcement, and the 10-year Treasury pushed back above 5 percent, which Peter calls a stepping stone to 6. He also covers Trump's demand for sub-1 percent rates, Scott Bessent's testimony, why 8 percent mortgages are coming, and why he expects gold to recover from this selloff quickly.
Chapters: 00:00 Fed Hikes Under Pressure 00:33 Markets Priced In the Move 03:46 Fed Cornered by Inflation Talk 06:38 Symbolic Hike and Market Fallout 10:11 Fiscal Policy and Real Inflation 21:31 Bond Yields Surge and Trump Reacts 32:28 Import Cold Turkey Fallout 33:40 Tariffs And China Surplus 35:08 Empty Shelves Economic Crash 36:18 Five Thousand Dollar Dividend 44:30 Bonds For Bombs And Meme Coins 53:32 Crypto Politics Gold Outlook Farewell
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