The Next Fed Cycle Is Going Messy

Here's how you can tell

I almost re-wrote that headline to read "The New Fed Cycle Is Already Messy” but decided to take more of a passive approach.

I honestly believe the Fed cycle has already transitioned and we are in the beginning stages of what will undoubtedly be a very messy period for monetary policy. The reason I believe as much is the fact that the U.S. Treasury yield curves have bottomed out in a general state of unison as far back as a few months ago. Typically, the first rate cut materializes about 9 months to a year after this happens; a signal was abundantly clear back in early to mid 2018. And while also uniform, the bottoming-out of the curves was a lot cleaner back then than it is now.

The curves are pretty clear on this one: The Fed’s finished tightening but looser monetary policy is going happen in anything but an orderly fashion.