A Big Piece of the BBB Puzzle-Lower Interest Rates

July 9, 2025

Mish's Daily

By Mish Schneider

With FOMC minutes published today, most Fed members eye rate cuts this year, but are split on what are the next steps.

One must cynically wonder which of the members are eyeing Powell’s job.

President Trump has made no secret of how much he wants rate cuts, to the point of insulting Jerome Powell’s intelligence.

And so, will Trump get what he wants?

If Powell quits (rumored) will there be a Supercycle in commodities?

A topic I have covered extensively.

We still have the debate on stagflation or disinflation.

Meanwhile, my trifecta of inflation is working well.

- Gold to silver ratio-narrowed but needs to narrow more

- Dollar in a downtrend with only narrow rallies

- Now sugar potentially bottoming.

The chart of the long bonds TLT, suggests that Trump will have his way and at some point, rates will drop.

In the meantime, just that perception is giving long bonds a bid.

And do not forget, sometimes it is buy the rumor and sell the news.

A lesson in phases and momentum:

In early June I wrote a Daily about the long bonds and the bullish phase change.

I was prepared for the phase change as momentum (circled), cleared the 50-DMA (blue) before the price did (also circled).

Then, in mid-June the price followed and closed twice over the 50-DMA to confirm a phase change to recovery.

TLTs climbed to the January 6-month calendar range high (green horizontal line) and that was it for the rally.

Then when TLTs sold off (note the second circle), notice what happened to the momentum!

The momentum never broke the 50-DMA while the price did.

This is the power of our real motion indicator.

Furthermore, now that TLT has cleared the 50-DMA once again, one has to think that the momentum is calling for a rally.

The long bonds are acting as though lower rates are coming.

Whether that is true or not, the charts always precede the narrative.

Educational purposes only, not official trading advice. 

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