“I'm of the opinion that the Fed doesn't change policy in the summer of an election year,” Bianco's head of research told CNBC's Fast Money on Monday. “If they don't pull the trigger by June, it will be November,” he added [or] December at the earliest – only if the data warrants it. “At this time, the data does not justify this.”
For Fed Chairman Jerome Powell to cut this spring, the economy would have to weaken significantly, according to Bianco.
“The economy is very strong right now,” he added. “It's in the non-landing phase, as we like to call it. It's not a Boeing plane. There's no parts falling out of it, and it's continuing to move at a speed of maybe 2.5% to 3%.”
This week's Fed meeting comes nearly two years after policymakers began the campaign to raise interest rates.
He added: “It looks like we may be bottoming out at around 3% inflation.” “This is not 2[%]The Fed has made clear that it needs confidence to reach Level 2[%]. We don't get that.”
It appears that Wall Street may be aware of this. the CME FedWatch tool Expectations for a quarter-point rate cut in June have fallen below 50%, Monday showed.
In addition, Treasury yields are rising. The yield on the benchmark 10-year Treasury note is 4.328% — the highest level in a month and approaching a four-month high.
“They may go up,” Bianco added. “It will be the reality of inflation.”
In January, Bianco told Fast Money that the yield on 10-year bonds would reach 5.5% this year. This is a level not seen since May 2001.
He still believes that the backdrop will keep the yield heading higher.
“I don't think that's the consensus view in the market,” Bianco said. “When we were at 5% in October, we were getting 3% growth rates in the economy, and the economy was able to handle that level of interest rates well.”
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