Click here to view original web page at slaynews.com
As the Federal Reserve continues to hike rates into a rapidly slowing economy, macroeconomic analyst Luke Gromen warns of a growing risk of a default-culminating “death spiral” in U.S. government debt that will force the central bank to hit pause on monetary tightening sooner than markets expect, and then restart the money printers full blast to resume monetizing debt.
Soaring inflation has driven the U.S. central bank to embark on a path of quantitative tightening, with market expectations—based chiefly on eurodollar futures contracts—predicting that the Fed will continue hiking for another six months or so before hitting pause.
The Atlanta Fed’s market expectations tracker , which estimates the three-month average fed funds rate using a methodology that centers on eurodollar futures, predicts the Fed will hike no higher than to around 350 basis points, or 3.50 percent.
The final hike is expected to take place at the Fed’s December meeting, with the tracker then estimating a slight and steady drop in the fed funds rate, to around 284 basis points by mid-June 2023.
But this consensus view—namely that the Fed will keep hiking for another six months before pivoting—will face a hard reality check as economic indicators deteriorate and GDP slows, putting pressure on debt-servicing costs and forcing the Fed to bring forward its timeline for a pivot, Gromen argues. Far Faster Fed Pivot?
Gromen, founder of macro and investment research firm Forest For The Trees, told the Real Vision Finance program in a recent interview that he thinks the last Fed rate hike is barely a month away.
“My base case [scenario] is that what we’re likely to see, in my view, in the U.S. economic data over the next month or two is likely to pull forward the day … where the Fed is forced to pause hiking,” he said, predicting that […]
We Often Feel Like David Taking on Giants
Today’s Goliath is the Mainstream Media Industrial Complex that brainwashes the masses.
Our mission is very straightforward: To counter the false narratives and nefarious agendas destroying America today. It isn’t easy for obvious reasons; despite incredible growth over the last year we are still a very tiny fish in a huge media pond. But we’re fighting and we will continue to do so, Lord willing, for as long as we possibly can. The battle for America’s present and future is too important for us to back down to the giants that stand in our way.
We need help. I don’t want to say “desperately,” but the need is definitely great. If you have the means, please donate through our GivingFuel page, PayPal, or our Substack page. Your generosity is what keeps these sites running and allows us to get the truth to the masses. We’ve had great success in growing but we know we can do more with your assistance.
Thank you, and God Bless!
JD Rucker
