Fed may need to pivot by early November, when ‘something breaks,’ says Guggenheim’s Scott Minerd
With multiple cracks emerging in global financial markets, the Federal Reserve may be forced to end its aggressive rate hikes “when something breaks” and to pivot by the end of the World Series this fall, said Guggenheim Partners Global Chief Investment Officer Scott Minerd.
In an outlook posted on Guggenheim’s website, Minerd pointed to the past two weeks of interventions by the Bank of Japan to support the yen and by the Bank of England to help the U.K. bond market as a few of the troubling signs. Cracks are also showing up in credit markets, where deals are being abandoned; in an increase of mutual-fund outflows; and in a rising dollar that’s acting like a wrecking ball worldwide, he said. Mortgage-backed securities are under pressure, while implied volatility has risen in bond, stock, currency markets — all of which are exposing the fragilities caused by rapid aggressive rate hikes in the U.S. and around the world.
Data released on Friday only reinforced the likelihood that the Federal Reserve will continue to rapidly raise interests rates to contain the hottest inflation stretch of the past four decades. The U.S. added 263,000 jobs in September, the smallest gain in 17 months, though just enough to keep policy makers on track. Meanwhile, traders are bracing for the consumer-price index report next Thursday to show another 8%-plus annual headline inflation rate for last month.
https://www.marketwatch.com/story/fed-m ... eid=yhoof2
The Fed is playing a game of chicken it can't keep up for too long. Cracks are appearing all over the place and with the National Debt at 31 trillion the interest payments are going to be brutal the higher rates rise. They might pivot earlier, even the UN is begging them to stop
