CPI day as pivot, The Risk of Debt Burden, Fed + Intraday post (15/July)
Very important post
DATA RELEASES, PERSPECTIVE
Today, we get the CPI datas.
I estimate a stronger report with higher probability, as YoY rates near multi‑month highs and tariff‑impacted goods and services keeping pressure on prices. This would take September cut’s off te table.
However there is a chance for a milder upside core inflation (thats what the Fed actually looks at), +0.23% m/m, helped by tariffs (+8 bps), but still below consensus, and that would leave some room for September cuts.
I tell you, what is Trump’s problem here…
There is a looming debt‐service crisis under high interest rates. As Treasury yields rise, they increase discount rates, draw cash away from equities, and elevate risk premia, that compress valuations and trigger corrections. There’s a wide gulf between Fed‑fund futures (implying rate cuts) and Fed projections (no cuts until 2026), meaning a Fed surprise could send yields—and equity volatility—much higher.
What Trump wants is to get those 3-mo. T-bill yields down by showing artificially low inflation, so that MMF managers pull cash out of bills (yields fall) and redeploy into equities or credit. I posted about the scheme. If Fed cut rates, it can keep the “fake growth” alive until the reality of credit dynamics hit later…
What you need to watch is which side’s will prevails: Team Treasury/White House or the Fed’s technocrats. If the data is dovish enough to reprice Fed cuts or not. Data is always faked, we know that. But that will tell us how the market will evolve in the coming days, weeks and months, and who is in control and so what is the trade for the near-term…
Bearmarket now or a crisis later. Thats the question.