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Forward Guidance
Michael Kao on November Fed Meeting, Treasury Refunding, and Bond Market Bear Steepening (Co-Hosted By Michael Ippolito & Jack Farley)
Nov 1, 2023
01:07:49
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Former hedge fund manager and private investor, Michael Kao, joins the hosts to discuss topics such as the Treasury refunding announcement, bear steepening in the bond market, Federal Reserve's stance on rate hikes, analysis of closed-end funds, analyzing yield spreads in the high-yield market, and predictions for CPI and real rates.
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Quick takeaways
- The Fed's decision to not increase interest rates and focus on higher rates for a longer period may put pressure on the US dollar.
- The Fed's slow response to rising inflation and structural wage pressures could lead to a prolonged bear steepening of the yield curve.
Deep dives
Fed's Stance on Rate Hikes and Cutting Greats Discussed
The podcast episode discusses the Federal Open Market Committee's (FOMC) decision to not increase interest rates and their emphasis on not considering rate cuts. The speaker predicts that the Fed's stance of higher rates for a longer period than other central banks will put pressure on the US dollar. They highlight the effects of the Fed's monetary policy on global yield curves, comparing it to other major economies. The speaker argues that the Fed's hesitation and slow response to rising inflation and structural wage pressures from unions could lead to a prolonged bear steepening of the yield curve. They criticize the lack of strong leadership and suggest that the Fed should have hiked rates sooner to prevent further entrenched inflation expectations and structural wage pressures. The discussion also touches on the Treasury's issuance of debt and the potential impact on the market due to supply and macro factors.
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Discover
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Listen to the best highlights from the podcasts you love and dive into the full episode