Do you remember? There used to be a saying called ‘Powell Put’ or ‘Fed Put’. What did it mean? As those who know options can immediately understand, we can think of it as a precaution against decline. In other words, whenever the indexes in the US were going to fall, a statement would come from the Fed or Powell himself and the index would stay up again. Since the market now believed that this would be permanent, whenever there was a situation that disturbed the stock market, it would immediately think that Powell would make monetary policy do a somersault and support the economy again. This was called ‘Powell Put’.

Nowadays, this has become more general and the terms ‘Trump Put’ for cryptos and ‘Bessent Put’ for bond interest rates have emerged. If you really paid attention, whenever the crypto market goes down, Trump makes a statement and the big things the American government will do with cryptocurrencies become the agenda. This includes all kinds of supportive actions, from including them in reserves to issuing its own token. In other words, there is a clear precaution against decline, a ‘put’ option.

But more importantly, there is the bond market. Trump and his cabinet, who are experienced from the last round, have stopped bothering with Powell himself or the Fed. But as every president would want, they also want interest rates to be low during their term. Because low interest rates bring more physical investment and growth. However, they do not want to appear to affect the policy rate, after all, central banks are independent (are they?). That is why they are sycophantic and talk about the need to decrease the 10-year bond interest rate, which is considered the benchmark interest rate. When we say "Put", we mean so that the thing does not fall? At this point, we are looking at the price of the bond, not its interest rate.

While Bessent says that interest rates should fall, he actually says that the price should rise, and that is where the "Put" comes from. For this reason, Treasury Secretary Bessent even reduced the size of the bond auctions that are held periodically. In addition, in order to increase the demand for bonds, they even relaxed the regulation regarding the bonds that banks can own so that banks can have more buyers in the bond market.

While the political side is pressuring interest rates to decrease, the statements of the Fed presidents continue to be mixed. While some are talking about interest rate cuts, others are sharing that they are lowering their 2025 interest rate cut expectations. It is not known how long this will continue, but if you ask me, the effects of the customs duties will not be as inflationary as feared and will soon be reflected in prices and end.

Then, interest rate cuts will start. It seems that the growth issue will continue to occupy the agenda for a while. Because in the latest PMI data, the manufacturing PMI data, which gives an idea about US factory activity, came below 50, indicating economic contraction. We are already in an environment where growth concerns are at their peak...

Such news will affect both stocks, bonds and stocks for a while. For some reason, it did not affect copper at all. It seems that there will be an increase in unemployment, a significant contraction in public employment and a significant increase in the number of job seekers in the future; see DOGE & ELON.

All of this will drive growth fears to the ceiling and cause increased pressure on US stocks. Bond yields should clearly trend downward; just as Bessent said. In the meantime, parities should work against DXY due to falling US bond yields so that everything is complete.

In this scenario, we can see bond yields, which are currently around 4.35 percent, in the range of 4.00% - 3.80%. A 10 percent sell-off in the indices should not be surprising. If we look at the expected interest rate differences, one wonders if the parity will also reach 1.1500/1.1600. Of course, all of this is valid provided that inflation remains under control without going too high as I think. If inflation explodes, the equation could reverse.

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