Part 7/13:
He predicts that, due to slow money supply growth and the accumulated effects of policy tightening, the Fed will likely lower interest rates to stimulate the economy once signs of a slowdown and labor market deterioration become evident. However, he contends that the Fed remains behind the curve, acting reactively rather than proactively, and misreading market signals.
U.S. Credit Rating and Market Implications
Discussing recent market developments, Hanky notes Moody's downgrade of the U.S. credit rating and the surge in bond yields, with 10-year treasury yields rising above 5%. He explains that these fluctuations are driven not only by fiscal concerns but also by regime uncertainty and market misperceptions.