Volcker needed 20%. We may only need 6%.
PCE is the Fed’s preferred inflation gauge.
Overlay it on the 1970s and the path rhymes. Add the 10-year and the rhyme gets harder to ignore.
That doesn’t mean we reprint the 1980 Fed fund rate. Debt, leverage, and interconnected markets are a different animal now. In the ’70s, yields had to go much higher to break inflation. Today the system is so levered that stress shows up at lower levels.
10Y has broken above its multi-year triangle.
Core PCE is still stuck at 3.3% .. well above 2%. If that overlay keeps working, PCE doesn’t need to go back to the ’70s highs. Even a grind toward 5-6% with yields toward 6% would be enough to strain debt service.
Next decade ain’t gunna be pretty .
Yours truly,
The Great Martis.✨
Volcker needed 20%. We may only need 6%.
PCE is the Fed’s preferred inflation gauge.
Overlay it on the 1970s and the path rhymes. Add the 10-year and the rhyme gets harder to ignore.
That doesn’t mean we reprint the 1980 Fed fund rate. Debt, leverage, and interconnected… pic.twitter.com/GaHzW9aJqC
— The Great Martis (@great_martis) August 29, 2026
With today’s debt load, 6% rates could hurt badly enough.