The wizards at the Fed and US Treasury have been forced to acknowledge that their “transitory,” inflation is, in fact, quite “sticky.” And with the inflation elephant now acknowledged by the circus of high finance, Treasury yields keep inching up, recently reaching 4.7% — the highest since November. The Fed is stuck: It needs to raise interest rates to tame inflation and make Treasuries more attractive. But the Fed can’t afford higher rates, with an already-untenable cost to service the existing debt and loan-dependent industries teetering on the brink.
Peter leads off this week with an episode covering last Friday’s stock catastrophe, Bitcoin’s recent performance, and the start of President Trump’s so-called “hush-money” trial.
Decades of negative interest rate policy in Japan have ended. That could mean the end of the $20 trillion “yen carry trade,” once one of the most popular trades on foreign exchange markets, and a chain reaction in the global economy. The yen carry trade is when investors borrow yen to buy assets denominated in higher-yielding foreign currencies, like the USD, where interest rates are higher.
Peter recently appeared on Market Overtime with Oliver Renick for an interview. In their wide-ranging discussion, Peter speaks on monetary policy, the reliability of inflation data, and reasons to avoid Bitcoin.
Peter’s back in Puerto Rico this week for his podcast after another week of record gold prices. In this episode, he discusses media coverage of inflation, this week’s CPI report, and Bitcoin’s weakening price relative to gold.
In February, the data showed that Yellen was making a big bet that long-term rates would not stay elevated for long. This was demonstrated by the volume of short-term debt issuance. The Treasury was willing to pay higher rates to keep the maturity of the debt shorter.
This time Peter tackles Jerome Powell’s speech from Wednesday, in which he announced that the Fed is holding the federal funds rate between 5.25 and 5.5%. He also briefly discusses Bitcoin’s pullback and the media’s lies about Donald Trump.
Consumers aren’t the only ones defaulting on their debts: Corporate bond defaults were up massively in 2023, especially for high-risk junk debt, and the trend is continuing this year at a pace not seen since the 2008 global financial crisis. Unsurprisingly, companies selling low-rated junk debt are being hit the worst.
In this episode, Peter reacts to a hotter-than-expected CPI report, big trades in Bitcoin, and the federal bill that would ban the popular social media app TikTok. He also notes silver’s historically low price, which is nearly 50% of its 2011 high.
JD and Joel discuss the new all-time highs in gold, Peter’s recent podcast, the Fed’s next move, and why silver has become an especially good deal.
