Fed seen on track for 25-basis-point rate cuts next week and in December

Traders of futures that settle to the Fed's policy rate instead moved to price in about a 99% chance that the central bank on Nov. 7 would cut its policy rate by a quarter of a percentage point to the 4.50%-4.75% range, compared with 92% before the release of the jobs data. They see about an 83% chance that the policy rate will be in the 4.25%-4.50% range by the end of this year, compared with 69% earlier.

Fed policymakers will begin their next two-day policy meeting a day after the U.S. presidential election on Tuesday, and though the result is not expected to directly factor into their decision two days later, many analysts see election uncertainty as an added temporary weight on the labor market in October that could be reversed in coming months.

Financial markets currently see the Fed lowering its policy rate to the 3.50%-3.75% range by September of next year.

I’ve said it before and I’ll say it again: September’s first rate cut really marked the commencing of Phase 2 of US imperialist war against the rest of the world. This is quite possible the most evil plan that the US is about to pull.

As I’ve said before, the rate cuts will do two things: first, all the dollars sucked into the US capital market will flow into the foreign sector again, to make the Global South countries become addicted to the dollar again; and second, the rate cut will dry up the interest payment that had a huge contribution in the US deficit spending over the past two years, which can only mean a recession.

Remember when all the economics pundits crying about how Biden’s interest rate hike will cause a recession from 2022-2024? Well, they were all wrong. I’ve always said that the recession will happen after they start to cut the rate, and this is well timed to happen until months after the election (we won’t see the consequences until at least 6-9 months from now, depending on how fast the interest rate is being cut and how much deficit the Treasury is creating to compensate for that).

What to expect: many export-dependent countries are going to be economically crippled when the US goes into recession, as consumption and demands for goods and services slump. If the US can replicate the Global Financial Crisis of 2009, expect to see an explosion of IMF loans and waves of mass privatization across the Global South over the next few years.

These countries have been hit very hard since Covid, then the fallout of sanctions against Russia (commodity price increase), US fed rate hike (debt interest went up, investment capital outflows), they cannot sustain another shockwave like this.

The US will then exploit the crippled global economy to reshape the global supply chain to its own interest in its big fight against China. The economy over the next decade is likely going to be bad, and the outcome will be decided by a race to see who - the US or China - will get to reshape the global supply chain over the coming decades.

Fuck, this is so evil I cannot even begin to comprehend how ghoulish it must be to weaponize the global economy to retain its hegemony over the world. Unless China has some trump cards (I’m not seeing them), there’s no way we can escape from this. China’s monetary easing that was timed just after the US fed rate cut was a sign that even China, the strongest economy in the world in real terms, is afraid of what the US recession is going to do. This is the power of monetary imperialism.

The US is about to take a “big bite” on the globe.

(also BRICS has turned into a joke now, we shouldn’t expect to see a real challenge against US hegemony on that front as well)