The Fed’s Last Stand

BTC remained at $60,000 overnight. For the first time in BTC history, a strange scene appeared: the 100-week moving average crossed the 200-week moving average upward, forming a "golden cross".

After the Mid-Autumn Festival, the Federal Reserve will hold a meeting to set interest rates. This rate cut is almost a done deal. The only disagreement is about how much the first rate cut will be. Is it 25bp or 50bp? It is said that Federal Reserve Chairman Powell is consulting with the directors, and there are still differences within the board of directors.

The good news is that the market has changed from fear of recession to welcome a larger rate cut. The logic has changed. Therefore, a 25bp cut is a positive; a 50bp cut is an even greater positive.

The most important thing for the Fed now is to ensure that the interest rate cut and the US economy land safely at the same time.

Some people are upset that the Fed has not been able to "achieve success in one battle" in this round of interest rate hikes. However, the situation is stronger than people. The 38th parallel cannot be crossed, no matter how many American soldiers and American-made artillery shells are sent. So they have to sign and admit defeat.

In Anglo-Saxon culture, there is no such thing as swearing to die and not surrender. If you can't win, surrender is commonplace.

September is the 38th parallel of the Fed.

The Fed cannot cross this line. As early as a year ago in 2023 [“9.5 Teaching Chain Internal Reference: The U.S. Dollar and U.S. Treasuries are a Game of Chess & Deduction of the Approval Time of Spot ETF”], Teaching Chain talked about that U.S. Treasury Secretary Yellen issued more bonds in August 2023, over-financed, and promised to repurchase the U.S. Treasuries that were over-issued last year in 2024.

So Teaching Chain gave the reasoning in the internal reference on September 5 last year that in the middle of 2024 or the third quarter, that is, from June to September, Powell will cut interest rates to cooperate with Yellen's repurchase. September is the "deadline" of this time window.

Yellen is going to repurchase the U.S. Treasuries that were over-issued last year. This is a way of confusing the market: through repurchase operations, long-term bonds on paper (such as 10-year U.S. Treasuries) are essentially turned into short-term U.S. Treasuries (1-year).

It's a bit like "You are attracted by the interest I give you, and I am attracted by the principal you give me", isn't it?

The United States is fighting on two fronts and is short of money. Yellen had to resort to this last resort.

So this year, we have to buy back US bonds.

The well-known and certain logic is that if the Fed cuts interest rates, the US bond yield will definitely fall, so US bonds will definitely rise.

So we have recently seen that many "smart people" seem to have emerged overnight, and they are fooling people to buy US bonds on the Internet.

Think about it carefully, the logic that the Fed cuts interest rates and US bonds rise is 100% certain. The question is, is the rise that everyone knows about still an opportunity to make money?

Yellen buys back US bonds, and then helps the leeks pull a plate? Isn't it that all the good things in the world are done by the Federal Reserve and the US Treasury?

Therefore, it is necessary to gradually issue new bonds to replace old bonds, cooperate with interest rate cuts, and gradually replace the high-interest bonds issued during the high interest period with low-interest bonds.

Also, Mr. Buffett was "ordered" to take over a large number of US bonds last year to cooperate with the completion of the bond issuance task (refer to the article "Buffett Hoards Hundreds of Billions of US Bonds" on the teaching chain on August 9, 2023). Now that interest rates are going to be cut, it is time for Mr. Buffett to gradually unwind and exit, right?

Whether it is issuing new bonds or selling US bonds, all of these require a large number of leeks to enter the US bond market and take over for Yellen and Buffett.

So we have to start a public opinion offensive, and make a big fuss about the impeccable proposition that "the Fed's interest rate cut will inevitably lead to an increase in US bonds" to brainwash the leeks.

If you can't harvest the big countries, can you not harvest the leeks?

For the so-called interest rate cut to land, there are still many bureaus to be arranged and many nets to be opened to allow "friends" to land safely.

The last battle of the Federal Reserve.

From July to September, short-term US bond yields have fallen by nearly 13%, which means that the corresponding US bonds have risen by nearly 15%.

In the same period, gold rose by more than 12%.

Bonds have risen, but the dollar has depreciated.

BTC is still in a downward channel and is undervalued. BlackRock has worked hard to lay out the spot ETF, which is impossible to do a one-time deal.

The depreciating and flooding dollar will enter BTC.

Yellen smiled. Buffett smiled. BlackRock also smiled. "Friends" all smiled. This is a good interest rate cut and a good landing.

Seeing that "friends" are all smiling, Powell and the Fed directors can also smile with confidence.