One of the charts I watch daily is the 10-year treasury yield. It’s now started creeping higher again since about the first of the month. Traditionally, growth stocks with lots of debt typically do not do well in a rising rate environment.
The US Debt Clock shows that the interest paid on the record $30.7 trillion of debt could exceed the US federal tax revenue if rates exceeded ~3.5%. And it will not take long before we are upside down and the Fed knows it.
I believe the Fed has painted itself into a corner and will inevitably have to continue to print “fake” money because it can’t afford to raise rates above 3.5%.
Where would growth come from if all federal tax revenue went to servicing our $30-plus trillion debt? We could already be in a life-changing recession with high inflation, and that kind of stagflation could be challenging for people who believe the narrative coming from Washington.
I’m guessing the Fed may raise rates one more time BUT they will unwind the balance sheet at a faster clip attempting to tame inflation they created.
This “experiment” has the possibility to set us back decades. Hopefully that’s not the case.
