This in answer to an email from a friend…

hi John

Since all observers  with common sense know that the longer the government/Fed holds down interest rates the greater the cost to fix….which must mean freeing interest rates totally, I predict that coming soon (before August 2021) to a Friday PM after the close the Fed will announce they are …’shocked, shocked’ to discover that because of rationale du jour(see below) the Fed will suspend all bond buying and let interest rates (including short term) float. I also predict that the Fed’s rationales will include at least 3 of the following…

1. the National Security need that the Treasury be able to sell enough treasuries

2. blame it on covid 

3. blame it on China (covid from wuhan lab)

4. the pitch that the upsurge in inflation is ’transitory’ somehow does not convince everybody 

5. blame on a collapsing dollar

6. ‘shocked, shocked’ to discover that the massive election fraud has now been documented (Arizona audit is to be made public by June 30th)

ps…once again the short of the June 2022 Eurodollar remains my favorite trade

Big Bob the Bond Bear