The Fed Is Losing Control Of Rates…Stocks Still Don’t Care

The Rates Disconnect

Stocks keep behaving as if rates volatility, inflation pressure and widening credit stress simply do not matter. Meanwhile, bond yields are breaking out globally, AI capex is starting to look inflationary, and the Fed risks falling further behind the curve.

The melt-up still lives on, but the gap between equities and rates is becoming increasingly hard to ignore. With VIX hovering near what increasingly looks like a natural floor, cheap upside volatility hedges are starting to look very interesting again.