Boxed In: Powell’s No-Win Dilemma

Why Cutting Rates Now Could Light the Match

I just got back from Maryland. Stepped off the plane, opened the chart, and boom—there it is.

The 30 year Treasury yield is trying to break out again. Relentlessly.

While the Fed sits still, the long bond is doing the talking.

(You have heard this before but you are getting it again) Look at the chart.

In 2018, when the long end rolled over while the Fed kept rates high, it was a warning shot for recession. Today, it’s the opposite. The 30 year is moving higher despite no rate hikes.

That’s not fear. That’s growth and inflation.

Now zoom out: what happens when the long end leads?

International stocks outperform. Copper, silver, and gold grind higher. Miners rip. Energy catches a bid. Real assets do what they always do in these cycles—they reprice.

And if Powell cuts? If the Fed installs a dove and tries to stimulate again?

Same outcome. Probably worse.

Because cutting here wouldn’t cool the economy. It would stoke it.