The Fed is in a race against time

Looking at an obscure yield curve: 2-year Treasuries versus Fed Funds (2s/FFs). There's a lot of signal there.

Dear readers,

One of our themes here at The Bitcoin Layer is that the Fed is a slave to rates markets. This means, simply, the rates market tells the Fed what to do. I have a glaring example of that for you today—an empirically sound way to answer the question: “when will the Fed stop raising rates?”

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Signal, Signal, Signal

Let me introduce the picture of 2s/FFs before the analysis. The candles represent US Treasury 2-year yields and the orange line represents the upper bound Federal Funds rate, or the “policy rate.”

A few things to orient us here: