These "Vigilantes" Are Sending Rates Higher

It's a disaster for the Fed [Total Wealth] BROUGHT TO YOU BY MANWARD PRESS These "Vigilantes" Are Sending Rates Higher SPONSORED [How a 3-Minute Chat with a Costco Manager Led to Incredible Gains]( What if a brief chat at a basketball game could lead to unimaginable wealth? That's what happened to Alexander Green... A short conversation led to 100-fold gains over his career. Dive into the story of the mysterious Costco manager who changed everything. [Click now to find out more.]( [Shah Gilani] Shah Gilani Chief Investment Strategist The Federal Reserve is facing an existential threat... It's losing the freedom it has enjoyed for decades to manipulate interest rates, especially lower them. Bond vigilantes are taking over... and taking control. Those vigilantes are staring down the staggering $10 trillion the U.S. Treasury has to raise over the next year to pay down our debts. They're pushing bond prices down (and jacking yields up) in the secondary market and grossly underbidding upcoming Treasury auctions. They're forcing the government to raise yields in order to sell their bills, notes and bonds. And there's nothing the Fed can do about it. SPONSORED [Legendary CBOE Trader Reveals: Make This ONE Trade Every Time The Government Drops Economic Reports]( [Secret Loophole]( 12X's per year... Target Up to 383% OVERNIGHT! [Discover The JOLTS Loophole]( Take Notes A record $8.9 trillion of government debt will mature over the next year. Add to that a record 2024 budget deficit of $1.4 trillion, according to the Congressional Budget Office... And you get a total of $10.3 trillion the Treasury needs to raise to roll over maturing debt, fund our government and finance the deficit. On Tuesday, the Treasury issued a record $69 billion of 2-year notes. It sold a record $70 billion of 5-year notes on Wednesday. And on Thursday, $44 billion of 7-year notes were sold. Those auctions went fairly well, considering their size. The success was no doubt due to fanciful hopes that the Fed will cut rates later this year... making current available yields look like they're close to peak rates. Those hopes will be dashed. Inflation's still percolating. The market's positive reaction to a higher-than-expected PCE print this morning is misguided. The reality is the economy's still expanding, wages are still rising, consumers are still spending, prices are still elevated, and the Treasury still has to sell $386 billion of new debt next month. Enter the vigilantes. SPONSORED [Alexander Green's 3-Minute Stock Secret]( Join investment titan Alexander Green as he unveils the simple yet powerful technique that helped him find Netflix before it soared 43,000% since 2005. [Find out what it is right here.]( Reining in the Fed In 1983, Yale-trained economist Ed Yardeni published a letter titled "Bond Investors Are the Economy's Bond Vigilantes," coining the now-famous moniker. In the letter, he lamented persistent and out-of-control fiscal spending. Yardeni wrote, "If the fiscal and monetary authorities won't regulate the economy, the bond investors will." Meaning - as The Wall Street Journal put it - "By viciously selling off U.S. bonds, sending the government a message to stop spending at its heightened levels." The bond vigilantes' most devastating attack on the market, from October 1993 through November 1994, took the 10-year Treasury yield from 5.2% to 8%. Anyone who thinks the current 10-year yield at 4.65%, down from its 2024 high of 4.72%, can't get to 5% or to 8%, doesn't know what bond vigilantes are capable of. They operate by shorting bonds in the secondary market, pushing down prices and lifting yields. The do that right before Treasury auctions, raising yields so potential buyers of upcoming issues will demand even higher yields. And they - as a like-minded group of institutions, pension fund managers, hedge fund operators and big trading desks - don't show up much at auctions. They leave the heavy buying to the public, to primary dealers, and ultimately to the buyer of first and last resort, the Federal Reserve. This is going to happen. The vigilantes are out there, en masse. They're going to demand higher yields, higher "term premiums" on the notes and bonds the Treasury has to offer. What that means for the Federal Reserve is nothing short of frightening. Jay Powell and co. want to cut rates, but they won't be able to because the vigilantes will be jacking them up... maybe a lot higher. The Fed is about to lose whatever credibility it has left. That's going to create a crisis of confidence. Because that's what happens when a central bank loses control of its ability to manipulate rates. The silver lining is that you can play higher rates with the Ultrashort Lehman 20-Year Treasury 2X ETF (TBT). It goes up in price when yields go up. That's what I'm doing. Cheers, Shah Want more content like this? [YES]( [NO]( Shah Gilani Shah Gilani is the Chief Investment Strategist of Manward Press. Shah is a sought-after market commentator... a former hedge fund manager... and a veteran of the Chicago Board Options Exchange. He ran the futures and options division at the largest retail bank in Britain... and called the implosion of U.S. financial markets (AND the mega bull run that followed). Now at the helm of Manward, Shah is focused tightly on one goal: to do his part to make subscribers wealthier, happier and freer. You are receiving this email because you subscribed to Total Wealth. To unsubscribe from Total Wealth, [click here](. Need help with your account? [Click here](. 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