TAG Industrial Watch: October 18, 2025

In the January 2023 issue of the Industrial Watch magazine, TAG predicted that, “When the Federal Reserve inevitably reverses course, a window of opportunity will emerge as interest rates temporarily recede.” That temporary window of opportunity failed to materialize when the Fed began cutting interest rates last year, partly because the Fed continued to reduce its balance sheet, effectively selling U.S. Treasuries and adding to the upward pressure on interest rates. However, with Fed chief Jerome Powell telegraphing the end of its Treasury sales, that temporary window may finally be upon us. This week, interest rates on the 10-Year Treasury Note slipped below 4.0 percent for the first time since the president’s Liberation Day announcement of widespread tariffs. Given the supply and demand for Treasuries, it’s not a stretch to predict that the Fed will sooner-rather-than-later resume its role as the top financier of our government budget deficits.

While it’s impossible to predict how low interest rates will fall and for how long, it’s evident that this fall will likely be temporary. Foreign central banks are replacing their dollar reserves, mostly invested in U.S. Treasuries, with gold at the fastest pace since the runaway inflation of the 1970s (Visual Capitalist). And now Wall Street giants like J.P. Morgan’s CEO Jamie Dimon have acknowledged that gold’s price has plenty of room to run as investors around the world begin to add the yellow metal to their portfolios for the first time. In other words, the U.S. bond market is poised to experience an unprecedented wave of selling that could easily send interest rates soaring. However, before this happens, industrial investors can take advantage of the current interest rate environment to buy or sell before that window closes.