Pause. A chair scrapes.
Recording begins mid-sentence. Speaker identified by voiceprint as a senior desk officer, New York Fed. Background noise: keyboard clatter, a phone buzzing repeatedly.
…because Williams went out there Thursday night and said the quiet part into a live microphone. "Stubbornly high." That’s the phrase. Stubbornly. Like inflation is a mule and we’re the farmer with a two-by-four. The ten-year closed at 5.15% . The thirty-year at 5.48%, the biggest weekly yield gain since April of last year . And the tape is now pricing a December hike as a near-certainty, with Goldman out there telling clients the March meeting is live too, and the first cut doesn’t arrive until December 2027 . Let that sink in. The first cut is thirteen months away by Goldman’s own math. The dot plot in December is going to look like a ladder with no bottom rung.
Pause. A chair scrapes.
You want to know what actually broke this week? It wasn’t the CPI print. Hot, yes, but we’ve had hot prints. It was the PPI that came in this morning and confirmed the pipeline is not clearing. Core PPI month-over-month above consensus. The goods disinflation story, the one that was supposed to ride to the rescue in the second half of next year, just took a knee to the groin. And the market response was textbook bear steepening: two-year up half a basis point, ten-year up six, thirty-year up five and a half . Long-end selling when the front end is anchored means the bond market is not pricing a cycle anymore. It’s pricing a regime. Term premium is back from the dead and it is hungry.
Sound of a mug being set down.
Now look at bitcoin. Sixty-eight thousand and change this morning. Down nearly nine percent on the week. CoinGlass clocked fourteen hundred and seventy million dollars of liquidations in twenty-four hours, one point three billion of it longs . A hundred and seventy-five thousand traders got carried out . The ETF flows have flipped negative. And every crypto Twitter account that spent October explaining why $75,000 was a floor is now posting the same chart with a different trendline drawn at $67,000. The real yield on the ten-year is above two percent in inflation-adjusted terms. Bitcoin doesn’t pay a coupon. It never did. But for a while the market pretended the absence of a coupon was a feature. Now the opportunity cost has teeth.
Papers shuffling.
The yen is the tell nobody wants to read. Dollar-yen at 159.90 Thursday night. Katayama out there warning about "one-sided, rapid moves," which is MOF code for we are watching and we are nervous . The last time the Treasury intervened to buy yen was July, alongside Japan, first time since 1998 . That was four months ago. The yen has given back everything since then and then some. If 160 breaks, and it will break, the BOJ is in a corner with no good exit. Hike into a slowing economy or let the currency go and import inflation on top of an energy shock that is already running through the entire import bill. The JGB ten-year at 2.87% is the market telling you the BOJ’s yield curve control is a museum piece.
Long exhale.
And then there’s Nvidia. Jensen Huang, gone. Colette Kress, interim. The stock opened down fourteen percent, closed down four point three, and the retail bid was so aggressive Vanda had to double-check the tape. A hundred and eleven million in the first half hour . AMD up five point nine. Broadcom up five point five . The rotation is so obvious it’s almost boring. But here’s the thing that should worry the committee more than it does: the AI capex cycle was supposed to be the productivity shock that let us grow our way out of this inflation. If the flagship name in that cycle is now a governance risk, the timeline on that productivity dividend just got longer. Longer productivity timeline means more rate hikes before the supply side bails us out. Goldman’s March hike call is starting to look optimistic.
Phone buzzes again. Ignored.
What does all of this have to do with the December meeting? Everything. The market has already done the committee’s work for it. Financial conditions have tightened materially in three days. The dollar is at an eighteen-month high . The long end is screaming. If the committee hikes on December ninth, it risks being the boy who cried wolf after the wolf already ate the sheep. If it doesn’t hike, it loses whatever credibility it has left with the bond market, which is the only constituency that actually matters. Williams has already front-run the decision by telling everyone the economy is "getting stronger but not overheating" . That’s a hike sentence dressed in a cardigan.
Sound of a chair being pushed back.
My honest read? The committee hikes. It hikes because not hiking would require an explanation, and this committee has run out of explanations that anyone believes. The PPI number this morning sealed it. The energy shock is feeding through, the labor market is holding, and the long bond is going to keep selling off until someone at the Eccles Building says the word "restrictive" and means it. Bitcoin already knows. The yen already knows. The only people who don’t know yet are the equity strategists still publishing year-end targets with a straight face.
Recording ends abruptly.
MEMO TO DESK — THURSDAY CLOSE
Treasury 10y: 5.15
30y: 5.48, weekly gain largest since April 2025
BTC: ~$68,500, -6.8%
Liquidations 24h: $1.47bn, $1.31bn longs
DXY: 18-month high
USDJPY: 159.90
Brent: ~$96
Goldman first cut: December 2027
Position accordingly.