
Has the Fed Been Making A Mistake?
The channel Into The Cryptoverse analyzes whether the U.S. Federal Reserve is making a mistake by refusing to follow the signals of the 2-year Treasury yield and raise interest rates.
The Current Situation- The 10-year yield is at about 4.8% – and rising.
- The 2-year yield has been climbing since February, yet the Fed keeps its current target rate unchanged.
- The Fed funds rate is 3.75% – lower than in 2023, when the 30-year yield was similarly high. Back then, the rate was 5.5%.
- Inflation remains sticky: Oil prices are around $92 per barrel, adding upward pressure on prices.
- The labor market is stable, with unemployment trending down since late 2025.
- There is ample evidence for a rate hike, but the Fed hesitates – apparently also due to political pressure.
- Bond vigilantes are revolting: bond buyers demand higher yields because they do not trust the Fed's commitment to fighting inflation.
- A rate hike would be the best way to bring long-term yields down and restore credibility in the fight against inflation.
- Treasury Secretary Bessent's bond buyback program has not worked – yields are higher now than when it was announced.
- Only 60% probability of a rate hike in September – with only days left before the decision.
- The removal of forward guidance has created unusual uncertainty, likely leading to more violent market reactions.
- In 1997, a 25-basis-point rate hike initially caused a 10% stock market drop, followed by a multi-year rally.
- A rate hike is not a sign of a weak economy, but rather of a strong economy.
The speaker urges the Fed to act and raise rates. The administration's contradiction – claiming a strong economy while pushing for rate cuts – is dangerous and could trigger another inflationary spiral.






