The Bond Market Has Become the New Fed Chair: Bits + Bips

Summary

Noelle Acheson discusses the divergence between bond yields and stock markets, persistent inflation, and the structural 'bliss trade' of government stimulus. She assesses the transition from Jerome Powell to Kevin Warsh as Fed chair, sees no rate cuts or hikes near-term, and notes crypto is range-bound with a potential catalyst from the Clarity Act for Ether. She warns that the S&P 500's concentration versus its equal-weight index resembles the 1999 dot-com peak.

• Bond yields are climbing globally while stocks rise on AI optimism, a divergence that Noelle sees as a warning.
• Inflation was building before the Hormuz crisis due to deglobalization and tariffs, and will remain elevated.
• The 'bliss trade' (big, large, lasting stimulus) is structural and adds moral hazard, supporting risk appetite.
• Kevin Warsh wants a smaller Fed balance sheet and less forward guidance, but the bond market will constrain him.
• Noelle expects no rate cuts or hikes; the Fed will stay on hold.
• Crypto is stuck in a range with no near-term catalyst, but the Clarity Act could boost Ether.
• The widening gap between the S&P 500 and equal-weight index is reminiscent of the 1999 dot-com peak, suggesting top-heaviness.
• Nvidia earnings continue to beat but the stock sell-off is a typical sell-the-news pattern.