368 TRILLION Reasons The Fed Won’t “Normalize” Rates

July 28, 2017

Many commentators are baffled as to why the Fed has suddenly reversed course. Throughout 2017 the Fed has talked repeatedly about raising rates several times as well as shrinking its balance sheet.

Then in the span of a single month, the Fed just about dropped all of this. Fed Chair Janet Yellen, speaking to Congress, confessed that the Fed is just about done with rate hikes and that any balance sheet reduction will NOT be used to drain liquidity from the system.

What Happened To Cause This Change?

The bond market went into revolt with yields on the 10-Year Treasury breaking out of a major downtrend.

Why Does This Matter?

Globally the world has tacked on some $68 TRILLION in debt since 2007. All of this has been issued based on the assumption that interest rates would remain LOW.

Put simply, if 2007 marked a large debt bubble, today’s bubble is significantly larger with global Debt to GDP now at 327%. In this context, any rise in bond yields (meaning bond prices are falling) represents a systemic threat.

Which is why the Fed has completely given up on hiking rates and is going to let inflation continue to percolate in asset classes.

This is going to send Gold and other inflation hedges THROUGH THE ROOF.

If you’re not taking steps to actively prepare your portfolio for this, you need to so now.

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Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

Graham Summers is Chief Market Strategist for Phoenix Capital Research, an independent investment research firm based in the Washington DC-metro area with clients in 56 countries around the world.

Graham’s clients include over 20,000 retail investors as well as strategists at some of the largest financial institutions in the world (Morgan Stanley, Merrill Lynch, Royal Bank of Scotland, UBS, and Raymond James to name a few). His views on business and investing has been featured in RollingStone magazine, The New York Post, CNN Money, Crain’s New York Business, the National Review, Thomson Reuters, the Glenn Beck Show and more.

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