Renowned commodities trader Peter Brandt has shared a tweet thread published by The Kobeissi Letter, an entity that provides top-tier expertise commentary on global capital markets and events happening in them.
The Kobeissi Letter revealed a major development regarding the Federal Reserve’s recent actions regarding managing inflation, and interest rates in particular. It says that, basically, now we are witnessing “the biggest market to Fed disconnect in history.”
Legendary trader Brandt directed a significant critique to the U.S. central bank and its chairman Jerome Powell, making a comment on the aforementioned thread.
Peter Brandt tweeted: “The Fed and its feeble chair and its forward guidance will go down into history for its fumbles.”
The Fed and its feeble chair and its forward guidance will go down into history for its fumbles https://t.co/ZuBQyDXRMo
— Peter Brandt (@PeterLBrandt) December 27, 2024
US inflation keeps growing
In the thread, The Kobeissi Letter addressed a significant disconnect they are observing that is taking place between the recent policy actions undertaken by the Federal Reserve and the way markets have reacted to them.
In particular, the tread states that the “10-year note yield is now up 100 basis points since the ‘Fed pivot’ began in September,” meaning that the interest on 10-year Treasuries that help the U.S. government borrow money, increasing the national debt, has soared. The thread also discusses major increases in such inflation indexes as core CPI, PCE, PPI and general CPI.
The treasury yields are currently at the highest level since May this year, despite the Fed aggressively cutting down interest rates. One of the side effects here, according to Kobeissi, is the impact on the housing market: “Buying the median priced home at $420,400 now costs an average of ~$400 more PER MONTH.”
The main reason for interest rates rising, while the Fed is cutting rates, the thread insists, is that “markets have realized that inflation is back on the rise.”
Bitcoin reacts to Jerome Powell’s recent announcement
In December, the world’s largest cryptocurrency, Bitcoin, plunged below the recently achieved $100,000 price level. This price reversal came after Fed Reserve chairman Powell made an announcement that the Fed intends to resume tightening its monetary policy next year.
This gave markets a signal that there might be a potential return toward higher interest rates, which means less liquidity for markets and for risk-on assets, such as Bitcoin and gold, in particular.
