Wall Street Bets On Fed Skeedaddle?

Investors betting on interest rates easing next year as yield curve inversion reached new extremes? So, Wall Street doesn’t think Biden & Fed have guts to resist its interest easing demands to avoid recession next year? Even though still higher rates would more likely cut inflation to a decent level and from the runaway variety they created with wild spending & ridiculously low interest rates?

The WSJ story suggests as much as it draws attention to “unusual relationship between Treasury yields” and investors trading as if betting on Biden’s Fed not so much interested in “easing inflation.” And, that’s notwithstanding the Fed’s talking points insisting it's going to keep on “aggressively” fighting inflation with continued interest rate hikes next year.

The “sign” investors think the Fed is already “close to winning its inflation battle regardless of the cost to economic activity” lies in the fact that “yields on longer-term US Treasurys have fallen further below those on short-term bonds … aka an inverted yield curve … than at any time in decades. In other words, “they think the Fed will need to slash borrowing costs to revive a faltering economy. Of course, it’s all a bet. As in Las Vegas.

Davd Soul