If the Fed cut rates, bond yields would soar. Crude oil prices are surging due to supply constraints. The market needs demand destruction to restore balance. In plain English, there is not enough crude oil to go around because of the inability of tankers to get through the Strait of Hormuz. So, someone has to consume less crude oil. Surging crude oil prices are the market’s way of forcing the marginal buyer to stop purchasing, bringing supply and demand back into balance. If the Fed tries to offset higher crude oil/gasoline prices by cutting rates, the market will respond by pushing prices even higher. It will not stop until enough people refrain from consuming crude oil/gasoline to restore balance between supply and demand. This vicious cycle would be viewed as inflation returning, like 2022, and the bond market would sell off hard, sending yields soaring. Scott Bessent knows this, which is why the smart move is to let the market do its job and keep Powell on hold until the supply shock passes.(Jim Bianco)