At Azuria Capital, they don't buy into the "hawkish" stance of the US Fed.

#AzuriaCapital founder Tavi Costa points out the sharp drop in inflation expectations in the US. The #Bloomberg chart shows that the 2-year, 5-year, 10-year, and 30-year breakeven indicators have significantly pulled back.

Simply put, the bond market isn’t showing a picture where inflation expectations are spiraling out of control. On the contrary, future inflation expectations are declining.

Against this backdrop, Costa finds the idea that the Fed is about to become truly "hawkish" quite strange. His argument is simple - given the current level of U.S. debt, the Fed's ability to maintain an excessively tight monetary policy for long is far more limited than many investors think.

He's comparing this to the story around DOGE (the agency, not the meme coin) and the expectations of government spending cuts. The market believed that budget expenditures would finally start to decrease. But that didn't happen. Not because they didn't try, but because the system just couldn't digest it.

With monetary policy, Costa believes there could be a similar story. Yes, the Fed can talk tough. Yes, inflation is still above target. Yes, some Committee members are again allowing for a rate hike. BUT it’s one thing to have "hawkish rhetoric", and another to expect the economy, the debt market, and the U.S. budget to truly withstand a prolonged tightening phase.