- The 2-Year Treasury yield sits at approximately 3.42%. Therefore the Fed ought to raise the Fed Funds Rate by 100 bps which would put the Fed Funds Rate lower and upper bound at 3.25-3.50%. The next FOMC meeting will be held September 20th and 21st.
- Simultaneously, the Fed ought to stick to its plan of reducing its Balance Sheet by $95 billion per month in order to shrink the money supply (“QT”). QT will likely lift Treasury and Government Agency yields as it is unlikely there will be sufficient buyers to offer price support for either security type.
- The next CPI release will be at 8:30am ET on September 13th.
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