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Renowned commodities trader Peter Brandt shared a tweet thread by The Kobeissi Letter, which provides expert commentary on global capital markets.

Federal Reserve Developments

The Kobeissi Letter highlighted a significant development regarding the Federal Reserve’s recent actions on inflation and interest rates, claiming we are witnessing "the biggest market to Fed disconnect in history."

Peter Brandt criticized the U.S. central bank and its chairman, Jerome Powell, tweeting: "The Fed and its feeble chair and its forward guidance will go down into history for its fumbles."

US Inflation Trends

The Kobeissi Letter pointed out a growing disconnect between the Federal Reserve's policy actions and market reactions. The thread noted that the "10-year note yield is now up 100 basis points since the 'Fed pivot' began in September." This indicates that interest on 10-year Treasuries, used for government borrowing, has surged, contributing to increased national debt. Significant increases in key inflation indexes, including core CPI, PCE, PPI, and general CPI, were also discussed.

Treasury yields are currently at their highest since May, even as the Fed cuts interest rates. One impact is on the housing market, where buying a median-priced home at $420,400 now costs an average of about $400 more per month. The rise in interest rates, despite the Fed's cuts, signals that markets recognize inflation is returning.

Bitcoin's Reaction to Fed Policies

In December, Bitcoin, the world’s largest cryptocurrency, fell below the $100,000 price point following Powell's announcement of plans to resume tightening monetary policy next year. This suggests higher interest rates ahead, reducing market liquidity for risk assets like Bitcoin and gold.

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