The Federal Reserve might raise rates in July because oil got expensive near Iran. Connect those dots if you can. I'll wait.
Traders spent six months pricing in rate cuts. Built entire portfolios around the Fed pivoting. Bought long-duration bonds like they were on clearance at a going-out-of-business sale. Then a tanker had a bad day in the Strait of Hormuz and now the odds flip. Because that's how monetary policy works. Geopolitical theater in a shipping lane determines the price of your mortgage.
Oil jumps three percent and suddenly inflation is back. Never mind that the Fed spent two years hiking rates while oil did whatever the f*ck it wanted. Never mind that crude prices have exactly zero correlation with the Fed's decision-making timeline when you look at any chart longer than a week. Some guy in a Bloomberg terminal saw Brent spike and decided July was hike month now. The market agreed. Because the market is basically a toddler with a Robinhood account.
Retail traders are currently Googling where the Strait of Hormuz is. Half of them think Hormuz is a pharma company. The other half are buying oil ETFs at the top because that's what they do. They see a headline with the word "jump" and they buy. They see the word "plunge" and they panic sell. Then they wonder why their accounts look like a cardiovascular patient's EKG.
The Fed will do what it was always going to do. Rates will go where they were always going to go. The chart doesn't care about tankers. The chart doesn't read headlines. But you do. And that's why you're poor.
Photo by Joachim Schnürle on Unsplash
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