Part 4/14:
Foreign entities, unable to print dollars domestically, are often forced to sell U.S. treasuries and equities to raise needed dollars, creating a cycle that pushes rates and the dollar higher. These “vacillations,” Luke warns, risk culminating in a market dysfunction where the bond market's volatility index (the Move Index) exceeds critical thresholds—specifically over 150—indicating the Fed’s loss of control.
He recalled that as of October 3rd, the index had hit 141, prompting some Fedspeak voicing hesitations about rate hikes. This moderation temporarily paused the dollar's ascent, but Luke emphasized that as long as the dollar remains strong, this cycle of rising rates and debt costs continues unchecked.