Yields hit a 19-year high and Peter Schiff explains why 5% is not the top, why borrowing costs keep rising, and what a Fed hike won’t fix.
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The 10-year Treasury hit 4.97%, a 19-year high, and the 30-year hit 5.35%. Peter Schiff explains why 5% is nowhere near the top and why the cost of borrowing is headed higher for everyone.
Peter argues the 40-year bull market in bonds ended in 2020 and we are only six years into a secular bear market that could run 20 years, with rates rising faster than they fell. The difference from 19 years ago is $40 trillion in debt, a short average maturity, and constant refinancing at higher rates. Treasury’s buyback program has been tripled to $6 billion and yields went up anyway, which he says only alerted the market that Washington is worried.
On the data: August CPI rose 0.4% for the month and 3.4% year over year, core came in hotter than expected at 0.3%, and PPI jumped to 5.4% year over year, a leading indicator that consumer prices go higher from here. Oil is back over $100 a barrel. Consumer sentiment fell from 51.7 to 47.8 while year-ahead inflation expectations rose from 4% to 4.6%.
Rate hike odds spiked to 88% for next week and 74% for December. Peter says Warsh has talked tough for so long that not hiking would end the Fed’s credibility, but a symbolic 25 basis points “ain’t gonna cut it” when inflation is rising faster than rates, which means real rates fall and policy gets looser despite the hikes.
Across markets, the major indexes finished down about 1% on the week. Gold closed near $4,338 and silver near $64.36, both lower on the week, which Peter calls a gift since a bond bear market is bullish for gold. Bitcoin sat just above $77,000 and he walks through a potential head and shoulders top that projects below zero.
He then takes apart the first ever Republican midterm convention, including the $5,000 “dividend” promised out of a government that has added almost $4 trillion in debt in 20 months, the claim that food and other prices are rapidly going down, who actually pays tariffs, record employment versus a record low labor force participation rate, and why the big beautiful bill was an inflation bill rather than a supply side tax cut. He also revisits the Fox News appearance that got him dropped for saying inflation would accelerate, marks 25 years since 9/11 and the liberties lost after it, and gives an update on tGold.
Chapters:
00:00 Fox News Inflation Call
00:34 9/11 Reflections and Liberty
05:27 CPI Report and Fed Odds
14:16 Symbolic Hike Won’t Work
36:49 Metals and Bitcoin Check
37:51 Bitcoin Head and Shoulders
39:24 Why a Midterm Convention
44:55 The 5000 Dividend Claim
57:17 Inflation Jobs and Wrap Up
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