Jim Bianco

Market optimism levels are too high going into 2025. Long-term bond yields rising despite Fed cuts — last seen in the 1960s–70s — signals the bond market is rejecting easing.

The Fed's next move after December 2024 cuts should probably be a rate hike, not further cuts. Inflation is not cooperating and the Fed may need to reverse course.

The Fed is making a mistake by cutting rates at the November 2024 meeting. The economy is too strong to justify easing, and rate cuts risk re-igniting inflation.

Rate cuts in 2024 are not warranted. 'I suspect there'll be zero rate cuts this year.' The economy is continuing to move along just fine.

10-year yield will rebound to 5–5.5%. 'We never saw that capitulation... one more push higher in yields to 5% to 5.5%'. Stated with yields at ~4.75%.

Time is running out for rate cuts in 2024. The Fed may not cut at all in 2024. 'I'm in the camp that the Fed does not change policy in the summer of an election year.'

The 10-year Treasury yield will surge to 5.5% in 2024. Inflation bottoming at 3% plus 2.5% real growth equals a fair value yield of 5.5%. This could happen as early as summer 2024.

Spot Bitcoin ETF approval expected the week of January 8 2024. Bitcoin likely sees a 'sell the news' pullback after ETF launch.

The SEC will have no choice but to approve a spot Bitcoin ETF; all applications will be approved simultaneously. The first price move after approval could be sharp and downward — from $40,000 to $15,000.

We are in year four of a multi-year bond bear market. Nominal GDP running 5–6% implies the 10-year has 'a little bit higher to go' from ~4.5% toward 5–6%.

Bond yields could race through 5% in the next couple of weeks. The 10-year Treasury has no reason to stop going up.

The 'no landing' scenario: the US economy continues to grow at potential with no recession and no soft landing. The Fed will have no reason to cut aggressively. Inflation will be sticky at 3–4%, not returning to 2%.

Inflation will bottom at 3% and start drifting higher, not returning to 2% target. This represents a new inflation floor in a post-COVID secular inflation regime.

Recession may not start until mid-2024. Wall Street expects a downturn in March or April 2023, but it might not arrive until March, April or June of 2024.

The Fed will stay 'higher for longer'. No Fed rate cuts in 2023.

The 40-year bull market in bonds ended in August 2020. We are now in a multi-year secular bear market in bonds. Yields will trend higher from their August 2020 low.

The Fed will crush inflation and with it, the stock market. The Fed will raise rates until inflation really moderates back to 2%, and will not stop short even if it risks a recession.

Inflation will peak in spring 2022 but will NOT rapidly decelerate toward 2.5–3% as the transitory camp expects. It will remain at an unacceptably high level by year-end.

The market is in for a 'rude awakening' on Fed rate hikes. The Fed will hike at least 5 times in 2022 — markets will get what they want one way or another. This will hit stocks and corporate bonds.

The Federal Reserve is 'behind the curve' and in denial about persistent inflation. More aggressive rate hikes in 2022 than most are expecting.

10-year Treasury yield could reach 2.5% within a year — 'very painful for people in the bond market'. A 3% inflation sticking around poses serious risk to bonds.

Inflation will be non-transitory — contra Fed Chair Powell's 'transitory' framing. Consumers have enough money and pent-up demand to drive prices up persistently.

2021 may mark the first inflation comeback in a generation, driven by federal stimulus and post-vaccine economic normalisation. Inflation is the big worry for 2021.

The 'four-five-six market' framework: cash returns ~4%, bonds return ~5%, stocks return ~6% — structurally lower returns than the prior decade. A new era for investors.