I think think the .75 rate increase last week was kind of a Jedi mind trick. The Fed was on track to do 1.00 over June and July. But I think they did the .75 in June and coupled it with some tough talk knowing there would be no July rate hike. The bond market seemed to understand all this since long bond rates went down slightly.
There are many currencies that are pegged or (in the case of the YUAN and YEN) virtually pegged to the dollar. Those countries will face a problem if interest rates move higher from here. China, most of Africa, Asia, South America are not equipped to raise rates like that. They will have to drop their peg. Then you will see inflation everywhere but here. Zero interest rates are dangerous. It causes things like the Chinese army and Russian Billionaires. Interest rates keep people honest. I would hate to owe someone money right now. And I would hate to depend on people paying me back a loan.
I mostly agree, but I don’t think they’ll entirely skip July. Maybe .25%.
All complete opinion of course.