Watching the Fed: Why Today’s CPI Could Be Bad News for Stocks

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by bitkogan

I’ve been watching this chart for a while.

It’s good that the percentage of Domestic Banks Tightening Standards is low. However, a year ago, it was over half, and things have only tightened further since then.

Historically, every time this indicator crossed the halfway mark, a recession followed—either during the peak or right after. In 2020, it even happened before the peak.

Perhaps we’ve been very lucky.

Or a recession is still on the way. In that case, the Fed shouldn’t delay rate cuts—25 basis points in September won’t make much of a difference.

See also  The former chair of the Federal Deposit Insurance warns that United States debt could drive the next financial crisis.

So, today’s CPI could end up being bad news for stocks.

As for TMF and TLT, the key point is that rate cuts are inevitable, and long-term yields will continue to decline. Just as I mentioned on Monday.

 


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