Rate Cut? Big Disappointmenting, Unlikely!

10 Ağu

US10Y Yield Drama: The US 10-Year Yield has been on a rollercoaster—recently dipping, then bouncing back like it’s trying to make up its mind. But let’s be real, being around 4% isn't exactly an invitation to rate cuts.

History’s Not on Your Side:

• Sure, the Fed has cut rates before without a crash, but that was when inflation wasn't hanging around like an uninvited guest.
  
• Remember 1998 or 2001? Yeah, those were different times. Now, we've got inflation breathing down our necks.
  

What’s Really Going On:

• This yield isn’t breaking any new ground—bouncing between 4.5% and 3.5% like a broken record.
  
• Everyone’s screaming about an inverted yield curve, but hey, what else is new? We’ve been hearing recession alarms for a while now, and still, no rate-cut savior.
  

Fed’s Big Non-Move:

• The Fed's been singing the same old tune—committed to that elusive 2% inflation target like it’s a sacred mission. They’re not about to abandon ship just because the market’s getting a little choppy.
  
• Meanwhile, Japan hit the reverse button on their rate hike decision. The markets caught their breath, and we’ve already seen some solid “buy the dip” action. Panic averted—for now.
  
• Even with the VIX spiking from all the fear trades, don’t be surprised if it calms down soon. The market’s got a short memory, and we’re likely headed for a higher high once this storm passes.
  
• Cutting rates now would be like pouring gasoline on a fire and hoping for rain. Not happening.
  

Bottom Line: The US10Y might be teasing you with the idea of a rate cut in September, but don’t hold your breath. The Fed’s playing hard to get, and unless the economy really goes south, they will not lower the interest rates.

Reversion Zones:

• Being back to 4% is a very high probability
  
• 4.35% will be soon after