It might be more beneficial if you give your reasoning behind the fed going from raising rates at record breaking rates, to then lowering rates within the next quarter or two, which is what would have to happen for your trade to be successful. Not much economic data to back your thesis….
In my opinion, you are way too early with your prediction. UnEmployment is still low, posted job wanted ads are still to high and we still have way too much liquidity in the market for the fed to pivot so quickly. Inflation is still out of control and the US still needs to spend the money from the infrastructure bill.
Also; for the fed to pivot so quickly, they would have to admit they made a mistake by overshooting. The fed is going to have a bit of a “wait and see approach” when they are done with this cycle of raising rates. They wouldn’t pivot to lowering rates until this time next year at the very very earliest.
Also, the fed follows the bond market, not the other way around. If you are betting on the bond prices going higher, then unemployment rate would have to rise, well before bond prices will increase. Municipalities/fed workers have only brought back 54% of their workers since covid. Meaning, municipalities/federal government are way behind in their rehiring.
Unemployment rate is not going higher in any significant way for some time. Even conspiracy theorists (whom believe the fed created this inflation to lower the value of sovereign debt), don’t believe the fed is going to flip back this year to an “easing policy”…..
It might be more beneficial if you give your reasoning behind the fed going from raising rates at record breaking rates, to then lowering rates within the next quarter or two, which is what would have to happen for your trade to be successful. Not much economic data to back your thesis….
In my opinion, you are way too early with your prediction. UnEmployment is still low, posted job wanted ads are still to high and we still have way too much liquidity in the market for the fed to pivot so quickly. Inflation is still out of control and the US still needs to spend the money from the infrastructure bill.
Also; for the fed to pivot so quickly, they would have to admit they made a mistake by overshooting. The fed is going to have a bit of a “wait and see approach” when they are done with this cycle of raising rates. They wouldn’t pivot to lowering rates until this time next year at the very very earliest.
Also, the fed follows the bond market, not the other way around. If you are betting on the bond prices going higher, then unemployment rate would have to rise, well before bond prices will increase. Municipalities/fed workers have only brought back 54% of their workers since covid. Meaning, municipalities/federal government are way behind in their rehiring.
Unemployment rate is not going higher in any significant way for some time. Even conspiracy theorists (whom believe the fed created this inflation to lower the value of sovereign debt), don’t believe the fed is going to flip back this year to an “easing policy”…..