Fed Holds at 3.75-4%: The Long End Is Pricing the Debt, Not the Fed
🚨 FED HOLD -> Stay at 3.75-4%
The Fed held today. 10-2, with both dissents wanting a hike. Headline CPI is 3.7, payrolls were 29K, and the election is in six days.
The Dot Plot Says December
Here’s their September dot plot. It tells you more than the vote did.
16 of 18 wanted another hike this year. Today they waited. Their own map says December.
Already Above Neutral
Long-run rate 3.25. Funds rate is 3.9. By the Fed’s own numbers policy was already above neutral before the September hike. They plan to go higher and hold there through 2027. Warsh called that removing accommodation. It isn’t.
The Part Worth Sitting With
And the part worth sitting with: not a single dot on this chart is above 4.5. Not this year, not next, not in the long run. The 10-year has traded above 5 for a month.
The long end is pricing above every rate this committee thinks it will ever set. That isn’t the Fed being priced. That’s $40 trillion of debt and a $2 trillion deficit being priced.
The Fed can hike into that. It can’t fix it.
Originally posted on X by Rosanna Prestia, MBA (@RosannaInvests): https://x.com/RosannaInvests/status/2115507658803618212
