Will the Fed Hike Interest Rates in May then Cut in July?

The Fed will not abandon its “QE to help the rich and rate hikes to screw the masses” plan until some bad things happen to the asset markets and the rich start feeling the pinch. Only then will the Fed stop raising rates and perhaps cut them as well.

Everything the Fed does is meant to help the rich and the super-rich. Just be aware of that.

If they were to cut rates this year they’d probably have to start hiking them again in election year.

At this moment, the FED is painted into a corner. It’s measure of inflation justifies raising rates; however, unrealized losses at banks are a systemic problem moving forward. Fortunately the 4 year interest rate cycle peaked late last year. I expect yields to to move sideways or lower for the next 12 months. If I were the FED, I’d hold rates at present levels for the next 12 months; instead of raising 25 basis points now and then lowering by 25 basis points later. In the near term, banks will tame inflation by tightening credit standards. By the end of 12 months, the bond market will have helped reduce banks’ unrealized losses at the long end and offset with gains at the short end. Hopefully banks will see this opportunity to shorten their portfolio duration significantly and increase capital reserves. As yields fall, the FED needs to lower the yield it pays depositors to rebuild its portfolio.

a) Which big bank will ‘fail’ in April/May?

b) What happens to inflation when gasoline demand increases for the summer season, and suppliers have cut back supply (and the SPR has an empty tank)?

What is the probability of A and B?

I think they are shooting for setting up and settling on a 4.5% 30 yr mortgage rate, sort of a goldilocks rate next year.

Housing is doing OK but if it ever needs to be saved, look for some sort of Gov backed 2% 30 yr mortgage special…bailout, program, whatever you want to call it.