Bonds Analysis by Michael Pento covering: USD/CNY, US Dollar Index Futures. Read Michael Pento's latest article on Investing.com
The Fed's minutes for their latest meeting held in July showed the committee's interest in raising interest rates further due to upside risks to inflation that are already well above their target level. The Fed is also perpetually worried about growth, which of course has nothing to do with inflation. After all, people working and producing goods and services can never be at the root of inflation.
The Fed has not been a buyer of US debt. On the contrary, its Quantitative Tightening program entails it to be a big disgorger of Treasuries. Now that the Treasury General Account is being refilled, the supply of treasuries that the market must absorb is increasing. Finally, do not forget the skyrocketing US deficit, which is throwing a massive amount of bond supply on the market.
“A near-stalling of business activity in August raises doubts over the strength of US economic growth in the third quarter. The survey shows that the service sector-led acceleration of growth in the second quarter has faded, accompanied by a further fall in factory output." The real, or inflation adjusted, Fed Funds rate, has soared from -8% in March of 2022, to 2% today. That is a massive rate of change drag on lending and provides great competition for the ownership of equities
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