It’s entirely possible, maybe even likely, that rate cuts are off the table until 2025. Once the concern turns into a sense of panic and/or something begins to break either in Japan or because of the war in Israel, that’s when the flight to safety returns and Treasury yields start moving lower. The biggest thing happening in the global markets right now is still Japan.

When you look at the totality of the current environment - utilities are rallying in spite of other defensive sectors heading the other way, lumber is nose diving while other commodities are running higher and gold is experiencing a parabolic move up - there are a lot of risk-off signals flashing warning signs. The dollar has a couple of catalysts in front of it that could move the currency in either direction.

The markets are still anticipating rate cuts and I think there’s a chance that Powell doesn’t give it to them. If there’s a hawkish pivot coming from the Fed, I’d expect stock prices to start falling again and the signals may be sensing some of that. If there’s one thing that I think the market is really underestimating right now, it’s the impact of Japan on the global economy.