Aspire CPD

Currencies & Commodities Fixed Interest & BondsGlobal MarketsInternational

Higher US interest rates coming?

23 Aug 2021 3 month(s) ago

Is the US Federal Reserve raising rates to defend the $US? It may trigger debt (leverage) eruptions.

A stronger US dollar and higher global rates may be being planned in the US. As the analyst Tom Luongo comments, the US Federal Reserve’s decision to pay 5 basis point on Reverse Repos – repurchase agreements, which are a form of short term debt that are very much the ‘canary in the coal mine’ for interest rate movements – was the “subtlest but most effective way to taper without tapering, tighten without tightening and undermine the World Economic Forum’s Great Reset while seemingly still supporting it.”

Short term interest rates (RRP) are rising and the US dollar is firming:

Luongo starts from the position that everything being said by the finance regulators, particularly the US Federal Reserve, is either a lie or psy-op. That is a pretty good starting place:

“The first rule of Fed Watching is to never listen to what they say, that’s for the algorithms and the momo-monkeys chasing nickels in front of the freight train do.

Smart observers watch what they actually do. And with those 5 basis points the Fed defended itself and the dollar.

What I see, for the first time since Nixon closed the gold window fifty years ago, the Fed was getting hemmed in by outside forces looking to throw its favored sons, Wall St., to the wolves.”

The US dollar has strengthened against the Euro, despite the likely increase in US debt through the Democrat’s massive infrastructure bill, and the growing leadership vacuum becoming evident with the Afghanistan catastrophe:

“In fact, the Foreign Repo Facility is just another tool to repatriate U.S. Treasuries to insulate U.S. banks and corporates from the very financial storm the Fed is actively fighting not just to save itself but to bankrupt Europe in the process.

"These are all technical moves which signal the Fed is preparing for another RRP rate rise. They are actively defending Wall St. and leaving the Biden Administration out to hang, not helping it achieve its goal of destroying the United States. Because Biden et.al. all work for foreign powers, be they China, Davos or both.

"Davos is trying to destroy confidence in the U.S. at every level, especially the dollar, to make Europe the destination for capital fleeing U.S. insanity. The Fed is reminding everyone who the big boy on the block is and it only takes a measly 5 basis points to get reinforce this

"Those thinking the Fed is making a policy mistake to allow the dollar to strengthen simply don’t understand the rules of the game. The Fed is inviting a crash. It’s inviting a revolt against the insane commies and traitors currently running the U.S. government.

"And why would the Fed do this when it stands to gain a tremendous amount of power? Well, to protect itself from inbred and feckless Eurotrash and be the one institution left standing after the dust settles.”

The victim, according to Luongo, will be the Europeans. He believes buying US shares is the best play, which is a brave call. The point is, in a world with far too much debt (leverage), it doesn’t take much for crises to occur:

"Once $1.16 trillion falls with the European bond market trading at these nosebleed prices, how much of a move in the euro will it take to unwind all of these newly-minted carry trades, rate swaps and the like put on during this rush into European sovereign debt which pushed the German 3 year bund to a recent low of -0.856%?

"Remember, what leverage giveth on the way up it takes away ten times as fast on the way down. At these yields the Europan bond market is over-leveraged to the point where it makes the stupid shit we see people do on Binance during a Bitcoin mania look like prudent financial risk management.

The mother of all safe-haven trades is what is emerging quickly here. The Dow keeps pushing higher, while European stocks have broken down. The Dollar is breaking out of a multi-year downtrend, gold is holding it’s ground, cryptocurrencies (Wall St.’s latest darling) are exploding, and there are trillions of euros worth of capital that are scared to death of what Powell says next week in Wyoming.”

The Australian dollar is also falling sharply because of the strengthening of the US dollar.

Not too much should ever be read into currency movements, but there are signs that interest rates will go higher in the US and this can easily follow on into Australia.

 

Reader note: This is general reporting only and should not be considered in any way to be investment or tax advice. It does not take into consideration the investment objectives, financial situation or particular needs of any particular investor. For more information please read our disclosure statement.

Related Article(s)