David Lin Sep 20, 2026 38m 20m saved
With Gareth Soloway, Chief Market Strategist and President of Verified Investing
Gareth Soloway went into the September Federal Reserve meeting long bonds and short oil, on the view that a rate rise would push the 10-year Treasury yield lower rather than higher.
Most investors read a hike the other way: the Fed raises, borrowing costs rise, yields follow. Soloway's case is about who buys the debt. The 10-year had just touched its highest level since 2007, and he said the buyers were pricing the risk that nobody at the Fed is willing to control inflation.
"And I hope the president deep down understands that you got to have a strong Fed otherwise people do not believe the US will ever pay its debts."
Soloway, on David Lin, runs the technical service at Verified Investing and trades the positions he describes on air — short oil in his commodity service, long bonds into the meeting, bullish the S&P 500 as long as one trend line holds. The conversation was recorded on Tuesday, September 15, the day before the Federal Open Market Committee decision, with stocks, gold and Bitcoin all lower and long-dated yields higher.
The full interview is covered here so you can skip it. 38 minutes of audio, 18 minutes of reading.
Here are the 16 calls that matter.
Key Takeaways
A hike was close to a lock, because the Fed does not disappoint markets once the probability clears 75%
Prediction markets had it at 87%; the CME's own tool had 93%
The counterintuitive call: raising rates brings the 10-year yield in, because it restores the confidence of the people who buy US debt
He was short oil around $105 and said crude reaches $50 before it reaches $150
Two routes down: a pre-midterm deal with Iran, or demand destruction
7,400 on the S&P 500 is where his bull case dies, and below it he sees 7,000
Bitcoin's whole pattern rests on 75,500, and he is waiting on the CLARITY Act vote for the next leg
Gold has broken out and is checking back, and he is not a buyer at today's price despite a 10,000–15,000 target
Governments know fiat's days are numbered, on his reading of Treasury intervention in the bond market
AI margins go from 80% to about 20%, which reprices the stocks that have gone parabolic
This is not 2022 again, because the Fed is reacting to oil rather than moving from zero to 5%
The cracks he watches: auto defaults, mortgage delinquencies and credit cards 90 days late
1. A Hike Is A Lock
Lin opened the day before the Federal Open Market Committee decision with the market's own odds: 87% on the prediction market Kalshi, and 93% on the CME's FedWatch tool. He asked Soloway whether he agreed. Soloway did, and gave the reason as institutional habit rather than economics.
The Fed does not disappoint a market that is more than 75% sure
They historically do not want to disappoint markets when probabilities are even north of 75%. It's generally a lock that they will do what the markets are anticipating.
Gareth Soloway
The economic case, as he laid it out, is oil. Crude had been above $100 a barrel for months, and the cost was reaching the consumer through freight rather than through the pump alone.
Diesel above $6 is a cost that gets passed through
You have diesel above $6 which remember that's supply chain that's trucks bringing goods so it's going to get passed through.
Gareth Soloway
2. Why Hiking Cuts Yields
Soloway then made the claim the rest of the interview hangs on: that a rate rise could send long-dated yields down. Lin asked him to confirm he meant the long end of the curve. He did.
The long end falls because a hike restores confidence in US debt
But the reason the long end could fall is because you have a loss of confidence in people buying our debt or sovereign nations or pension funds buying Treasuries.
Gareth Soloway
The loss of confidence, in his account, comes from two places: $40 trillion of federal debt, and a president involved in monetary policy. A Fed that acts on inflation gives buyers a reason to accept a lower yield.
He put the pullback level on the 10-year at 5%
Now, I don't think we're going way lower, but I could see this 5% as being a pullback level on the 10-year yield.
Gareth Soloway
3. The Bond Market Decides
Asked whether rising Treasury yields were a signal that the hike was coming, Soloway inverted the question. On his account the causation runs the other way.
The bond market is forcing the Fed's hand
Or you could even argue it that the bond market is forcing the hand of the Federal Reserve.
Gareth Soloway
He put the same point in international terms. Japan's 10-year yield has risen and the European Central Bank has tightened, which changes the relative attractiveness of US debt.
The US has to keep pace with everyone else raising
So, we've had all of these central banks raising rates around the US. The US has to raise the rate to keep pace.
Gareth Soloway
4. What The Banks Expect
Lin brought up a Wall Street Journal compilation of bank forecasts, dated September 11, and read it out: Goldman Sachs at 25 basis points, JPMorgan at 25, Deutsche Bank at 75, Bank of America at 75, Citigroup at 50, Barclays at 50, HSBC at an indefinite hold, and Jefferies expecting a cut in December rather than a rise. He corrected himself on air, pointing out that the column covered the whole of 2026 rather than the September meeting alone.
Asked whether 50 to 75 basis points by December was plausible, Soloway said half of that was.
Twenty-five basis points now, and 50 is possible before year-end
I do. I think 50 basis points is very possible. I think tomorrow is just a simple 25 basis point.
Gareth Soloway
His own position had changed over the year. Before oil rose he expected no hikes at all; elevated crude and diesel is what moved him.
5. The Pressure From Trump
Lin pressed the case for waiting. Inflation has been above the Fed's 2% target for more than 60 months, he said, quoting Kevin Warsh's own remark at the last FOMC press conference, so one more month of data would not settle anything — and Warsh has said repeatedly that he looks at trends rather than individual data points. Lin also read across the political pressure: the president posted on Truth Social that the Fed had better get smart and not raise rates in September, while complimenting Warsh personally.
Soloway said the pressure cuts the other way, and that not raising would be the expensive choice.
Refusing to raise would make debt buyers demand more, not less
And I hope the president deep down understands that you got to have a strong Fed otherwise people do not believe the US will ever pay its debts. And that's really the only reason we are still the number one player in the world in this regard.
Gareth Soloway
6. The 19-Year High
Lin showed a chart overlaying the 10-year yield on the S&P 500 and made the point that stocks had risen through most of the year while yields were also rising, so the standard explanation for the day's selloff did not hold. What was different, he said, was the 5% level itself.
Soloway agreed and gave the mechanism as rate of change, then the psychology.
The headline that moved the market was the 19-year high
And what we've just seen is a headline cross as of today that we made a new high on the 10-year that we have not seen in 19 years, right? Since 2007.
Gareth Soloway
On his chart, the 10-year has traded between roughly 3.5% and 5% since the 2023 pivot high, and that pivot is the line that matters.
Above 5%, the range trade becomes something else
Now, if we break above this 5% level, this pivot high from 2023, which we peaked above earlier today, now you're in a new scenario.
Gareth Soloway
7. The Refinancing Wall
Lin asked which would be worse for the economy: the long end rising on its own, or the short end rising because the Fed moved. Soloway said he expects one to go up as the other comes down, and that the reason to want the Fed in control is the debt that has to be rolled over.
About $7 trillion rolls over in the next 6 to 12 months
If we didn't have all this debt that has to be refinanced, I believe it's about $7 trillion in the next 6 to 12 months that's rolling over from the US balance sheet, the US debt.
Gareth Soloway
Interest already runs at a trillion dollars, and a 6% 10-year compounds it
And remember folks, we are at a point where we're paying a trillion dollars already in interest rates. You push the US 10 year to 5.5 or 6% and that number starts to steamroll exponentially even higher.
Gareth Soloway
He wants Warsh hawkish, without promising a rise at every meeting, and he wants the 2% target restated rather than quietly moved to 3%.
Someone has to be in control, because the buyers do not trust the president
No, the market and investors that are buying US debt need to know someone is in control cuz they don't trust the president.
Gareth Soloway
The Fed is the adult in the room
But the Fed has to be the adult in the room here and raise rates.
Gareth Soloway
8. The Goldilocks Hike
Lin asked what the ideal outcome looked like, given that the Fed could surprise in either direction. Soloway described a 25-basis-point rise, framed as data dependent, with an explicit willingness to move again before year-end if inflation does not come in.
The other half of his answer was geopolitical. He said the pressure on prices traces back to Iran, and that resolving it does more for inflation than policy can.
Crude back at $70 brings inflation in substantially
And that again you get oil back to $70 a barrel inflation will come in substantially.
Gareth Soloway
9. Contrarian Into The FOMC
Asked how he was positioned the day before the decision, Soloway pointed at the options market. The put-call ratio measures how many traders are betting on a fall against a rise, and it was skewed toward the fall.
The crowd is bearish, so he takes the other side
And the put call ratio is heavily skewed towards the bearish side. I would take the opposite angle of that.
Gareth Soloway
His reasoning is that market makers who have sold more puts than calls lose money paying those buyers out, so the market tends to move against the crowded side. On the index itself, his level was a trend line.
7,575 on the S&P 500 is the line he stays bullish above
What we can see here on the S&P 500 is that we are right into a major trend line here around 7575 on the S&P that as long as we stay above this I remain bullish on the markets.
Gareth Soloway
Soloway then said the market would rally if Jerome Powell stayed the course — naming the previous Fed chair rather than Warsh. Lin caught it and put it down to how long Powell held the job. Soloway called it muscle memory, and added a correction of his own about how much any chair controls.
The chair is one vote, not the whole committee
Even if he wants the rates to stay put, if there's enough votes from the other governors that they have to raise, they're going to raise.
Gareth Soloway
Asked for his levels after the meeting, he gave the downside. Between 7,575 and 7,400 is a zone he called murkier. Below that is a trend line running back to the 2021 peak.
Below 7,400 he sees 7,000
And if we break below 7,400, that's when I would get very concerned. That's a major trend line that goes all the way back to the peak of the bull market in 2021. And if we break below that, we likely head all the way down to 7,000.
Gareth Soloway
He also flagged what he thinks is coming later: a corrective decline around 2030, which he said could be severe enough to qualify as a depression.
10. Bitcoin's 75,500 Line
Lin turned to Bitcoin, which moved on August 19 when Treasury Secretary Scott Bessent said he would intervene in the bond market by doubling bond buybacks from 4 to 6 billion, and has traded in a range since. He asked what Bitcoin is waiting for.
It is waiting on the CLARITY Act
So I think part of what Bitcoin is doing is it's waiting for the CLARITY Act, which I know there's a vote on today.
Gareth Soloway
What the vote settles, on his reading, is whether the regulatory position on what can and cannot be done in crypto becomes transparent. On the chart, he described a break above the all-time-high descending trend line, a consolidation, and a bull flag — a pattern that resolves higher if one level holds.
The pattern lives above 75,500
Now, it's bullish as long as we hold this 76,000 to 75,500 zone.
Gareth Soloway
Every pullback since the breakout has been defended at that zone, he said, including the day of the interview. A trade below 75,500 would turn the pattern on its head.
11. Fiat's Days Are Numbered
Asked whether his Bitcoin case is the same as his equity case, Soloway said partly. Bitcoin is a risk asset and benefits when the S&P 500 does, but the Bessent intervention pointed at something larger.
Governments intervening in their own bond markets is the tell
To me, it tells me that the government, and this is not just the US, I mean, this is governments around the world, they are starting to realize that fiat's days are numbered.
Gareth Soloway
He put the timeline in decades rather than years, and said the direction of travel is what matters.
The meddling gets heavier because the alternative is a collapse
Now it still might be 10, 20 years, but at some point they are having to meddle in the markets more and more to maintain control and not allow a collapse.
Gareth Soloway
That, he said, is the case for gold and for Bitcoin as a long-term digital equivalent.
12. Gold Checks Back
On gold, Soloway said the breakout has happened and the next move is the one most people get wrong. A price that has been rejected at the same descending trend line several times does not usually rise in a straight line once it clears it.
Old resistance becomes support, and price comes back to test it
So in other words, it was resistance, resistance, resistance, breaks out, now it becomes support.
Gareth Soloway
Gold had broken out, hit resistance and was pulling back at the time of the interview, and he said it could fall further if yields keep rising.
He is not buying at this price
I think you can get it a little bit cheaper in the coming weeks or months.
Gareth Soloway
For anyone with a long horizon, he said the entry price matters less than the destination.
The cycle target is 10,000 to 15,000
But if you have a long-term horizon, you know, whether you get it $100, $200 cheaper, it doesn't really matter if you're thinking the upside is 10K or 15K in the next cycle.
Gareth Soloway
Asked to rank gold against stocks and Bitcoin for the rest of the year, he put Bitcoin first on the chart setup, said equity upside is debatable, and said gold's case needs a five-year view because it rests on fiat currencies degrading rather than on anything happening this quarter.
13. Oil To 50 Before 150
Lin framed oil as the variable everything else runs through: crude above $100 pushed the consumer price index up, which is why the Fed is moving, and oil and the 10-year yield have been closely correlated. Soloway explained the chain in plain terms: higher oil for longer means more inflation reaching the consumer, which means higher rates to fight it. Then he gave his position.
He is short crude into resistance around 105
So I'm in the case that oil is probably closer to a top here than not.
Gareth Soloway
He gave two routes lower. The first is political, and dated.
A pre-midterm deal with Iran is one way oil comes down
Number one is that as the midterms approach, there's more and more chance that Trump gives into a demand that they've been opposed to with Iran to get oil prices down before the midterms, which is a huge deal to the Republicans.
Gareth Soloway
The second is demand destruction from the diesel price. Lin then asked whether he would make the matching trade in bonds, and Soloway said he would: long bonds, expecting both yields and oil to come in, with the caveat that the call needs crude to stop rising within a week or so.
Asked whether he was surprised oil had not gone higher, Soloway said the Strait of Hormuz disruption was hard to size at first, and then the Red Sea and the Saudi pipeline became the story as the Houthis clamped down on both. He set the current price against the 2008 spike.
$150 oil in 2008 was worth more than $150 oil now
So 150 oil then was much more than 150 oil now and that was very painful at that point.
Gareth Soloway
His conclusion was the line Lin repeated back to him: oil reaches $50 before it reaches $150. US production and Venezuelan supply are part of why, though he said Venezuela's infrastructure needs work.
14. Diesel Makes It Sticky
Lin said diesel has hit all-time highs and that most US commercial trucking runs on it, so grocers and warehouses either absorb the cost or raise prices — and prices raised are rarely lowered. He said the prospect worried him personally, and asked what it does to a trader's outlook.
Soloway agreed, adding jet fuel and plastics to the list of places petroleum reaches, and said the consequence is arithmetic rather than sentiment: money spent on fuel is money not spent elsewhere.
Sticky prices pull the next recession forward
And so it will have a chain reaction. The longer this stays up, the worse it is and probably the quicker it draws forward that next recession that is looming at some point.
Gareth Soloway
15. The Slow Motion Wreck
Lin pushed back on the recession call directly: the conditions have been in place for years and it has not happened, so why does it have to. Soloway answered with cycles, and then with a metaphor he extended through the rest of the answer.
Since 2008 the system has been kept awake artificially
What we've been going through is since the great recession in '08-'09, the Federal Reserve and the government have been pumping the system with drugs essentially to keep the high going.
Gareth Soloway
He allowed that AI capital spending could extend it, perhaps to 2030. What he does not allow is that it runs indefinitely.
The ending is a crash or something worse
But at some point you have a crash and we know that's a crash off drugs or the patient dies which is the worst scenario.
Gareth Soloway
Government borrowing is the stimulus, and the bill arrives in the bond market
It's like a slow motion train wreck where you have the government running up massive debt which is stimulative, right?
Gareth Soloway
The repercussions he named were the ones already visible: a rising 10-year yield, costlier borrowing, and a housing market feeling 30-year mortgage rates.
16. AI Margins Come Down
Asked what has run far enough to reverse, Soloway named the AI trade and the memory stocks that ran over the summer, Micron among them. His objection is not to the technology but to the cycle: demand pulled forward, investors chasing, and new capacity arriving.
Margins go from 80% toward 20%
So AI margins are not going to be at 80% for the next 30 40 years. There's going to be a draw down and margins honestly probably go back to 20% and that means a huge revaluation for a lot of these stocks that have been parabolic.
Gareth Soloway
Lin closed on the comparison that had been bothering him: in 2022 the Fed hiked and everything fell at once. Soloway said the size of the move is what separates the two.
Reacting to oil is not the same as going from zero to 5%
If you're expecting the Fed to just react to oil and hike a few times this year and next, perhaps not.
Gareth Soloway
He expects capital spending to keep the economy on life support and profits to hold up for now, and said Warsh is aware that things are already breaking.
The consumer data is already deteriorating
And again, you look at the data, you have auto defaults already rising substantially. You have even mortgages, mortgage delinquencies are starting to tick up. Credit card 90 days late starting to surge.
Gareth Soloway
That, on his reading, is the constraint on how far the Fed can go: raise too hard into a consumer already struggling and the result is worse than a mild recession.
Bonus Insights
Amodei's warning is a risk to the growth assumption
Listing what the market had absorbed without falling much, Soloway included a weekend intervention by Anthropic's Dario Amodei calling for AI development to slow down. His point was about the trade rather than the ethics: a slowdown undermines the assumption of unlimited growth that the AI stocks are priced on, and the S&P 500 was still only about 3% off its all-time high with that and everything else in the mix.
The joke about the job
Soloway opened with a line from a friend, who told him he never understood how Fed officials are paid so much to release a number between 25 and 75, and that he could do the job himself.
Where the yield actually sat
Lin gave the intraday numbers on the benchmark: 5.041% at one point during the day, back down to 4.994% by the time they spoke. The 10-year, he noted, had reached its highest level since 2007.
Soloway's bottom line is that the Fed raising rates is the bullish outcome rather than the bearish one, because what threatens the market is whether anyone still believes the US will control inflation and pay its debts rather than the price of money itself; the positions that follow are long bonds, short oil, and long the S&P 500 until 7,400 breaks.
Products, Companies & Tools Mentioned
Verified Investing (His firm. He runs a commodity service where the short oil position sits, and describes the business as charts and probabilities for the retail investor)
Kalshi (The prediction market Lin read the September odds from: 87% on a hike. It is also the episode's sponsor)
CME FedWatch (The CME's rate-probability tool, at 93% on the day; Lin called it accurate in the run-up to a meeting)
The Federal Reserve (Expected to raise 25 basis points, with Kevin Warsh chairing; Soloway wants the 2% target restated rather than moved to 3%)
The US Treasury (Scott Bessent's move to double bond buybacks from 4 to 6 billion is the August event Soloway reads as governments defending fiat currencies)
Micron (The memory stock he named as the example of the AI trade pulling demand forward)
Anthropic (Dario Amodei's weekend call to slow AI development, which Soloway said puts the unlimited-growth assumption at risk)
The Bank of Japan and the European Central Bank (Both raising, which he says forces the US to keep pace or watch other sovereign debt become the better yield)
Books & Resources Mentioned
The Wall Street Journal's bank forecast table (The September 11 compilation Lin read out: Goldman Sachs and JPMorgan at 25 basis points, Deutsche Bank and Bank of America at 75, Citigroup and Barclays at 50, HSBC at an indefinite hold, Jefferies at a December cut)
The CLARITY Act (The crypto market-structure legislation Soloway says Bitcoin is waiting on; a procedural vote was scheduled the day of the interview)
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