Analysts Say an Onslaught of Fed Rate Hikes Could Spur a ‘Bond Market Flash Crash’ or ‘Blow up the Treasury’

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The U.S. economy has been struggling with inflation running rampant and investors are eagerly waiting for the U.S. Federal Reserve to announce the next federal funds rate hike next month. Harris Kupperman, the founder of the hedge fund Praetorian Capital, believes the onslaught of Fed rate hikes could very well “blow up the Treasury.” Furthermore, amid the gloomy macro trends, the chief marketing officer at Fluid Finance, Jessica Walker, says the failing economy and floundering fiat currencies reveal the true benefits of cryptocurrencies.

Praetorian’s Harris Kupperman Says a Barrage of Fed Rate Hikes Could End up ‘Blowing up the Treasury’
This week News reported on a number of analysts who believe the U.S. central bank will codify another federal funds rate (FFR) rise by three-quarters of a point at the meeting in November. On October 18, the founder of the hedge fund Praetorian Capital, Harris Kupperman, published a report that claims an “avalanche is in motion” as he believes the Fed is currently trapped and despite talking tough, he believes the Fed will need to pivot on raising the FFR.

Kupperman also argued his case on the podcast “Forward Guidance” when he detailed that the Fed will have a real hard time when oil surges again. The Praetorian Capital founder and chief adventurer at Adventures in Capitalism, argued on the podcast that the Fed will have to pivot and accept high inflation as today’s reality. In the report published on October 18, Kupperman notes that continued rate hikes targeting a rate of 4.6% or higher could lead to “blowing up the Treasury.”

J. Kim Insists ‘2008’s Financial Weapons of Mass Destruction’ Still Exist and if the Fed Goes Rogue, the US Central Bank Could ‘Create Illiquidity in the Largest Bond Market in the World’
Additionally, J. Kim of skwealthacademy substack explains in a recent blog post that the forgotten 2008 financial weapons of mass destruction are still a problem in 2022. Kim further believes that a “U.S. Treasury bond market flash crash is inevitable under these market conditions.” Speaking about the financial weapons of mass destruction, Kim details how the perception of a mass decrease in global derivatives since 2008 is an illusion.

Kim’s article adds:

If you assume the perspective that bankers have cut their positions in these extremely risky products that can collapse like a procession of dominoes if one large bank defaults on any major category of these derivatives, you would be wrong.

Kim’s blog post explains how it’s possible the U.S. central bank has gone rogue and similar to Kupperman’s position, it could wreak havoc on the bond market.

“While the ECB seems to be keeping their end of the bargain in not imploding this critical derivative market, U.S. central bankers have not,” Kim’s blog post notes. “If the Feds really go rogue in continuing to drive the USD strength against all other major global fiat currencies higher, not only will this possible create illiquidity in the largest bond market in the world, U.S. Treasuries, but it may cause massive defaults in the USD denominated interest rate derivative market as well.”


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