ALL INPredictions
Last updated Nov 29, 2025
Prediction
Chamath
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Chamath @ 00:33:40Wrong
marketseconomy
If the volatility of the 10-year Treasury yield continues to slow as it was in early Q1 2022, then a roughly 100 basis point increase in interest rates will flush most inflation through the system, leading to a brief market pullback in Q1 2022 followed by a rapid rebound in risk assets as sidelined capital re-enters markets.
if that continues to hold that means that people are really saying there's a small amount of real inflation, a reasonable amount of transitory inflation. And we're about to kind of wash most of it through the system with a 100 basis points of rate hikes. And if that's the case, then you may see a quick pullback in Q1. And we're back to the races again because of all this other money. That's going to say I got to get back in.View on YouTube
Explanation

The prediction tied a specific near‑term path to bond volatility, inflation, rates, and risk assets:

  1. Condition on 10‑year Treasury volatility: Chamath’s scenario required Treasury yield volatility to remain subdued (“if that continues to hold…”). In reality, bond‑market volatility picked up: by late March 2022, the MOVE index (a standard measure of Treasury volatility) had jumped roughly 25%, reflecting renewed turbulence in yields rather than continued calm.(reddit.com) So even the stated precondition didn’t really hold.

  2. “100 bps of hikes will wash most inflation through the system”: Instead of a modest 100 bp hiking cycle, the Fed raised rates from near zero in March 2022 to 4.25–4.50% by December 2022—about 425 basis points of tightening in 2022 alone, continuing into 2023.(orangebybk.com) Inflation did not quickly fade after the first 100 bps: CPI rose from 7.5% year‑over‑year in January 2022 to a 9.1% peak in June 2022 and stayed above 6% through late 2022, only gradually easing in 2023.(bls.gov) That is the opposite of “most of it washed through” by a small initial hike.

  3. Market path: brief Q1 2022 pullback then “back to the races”: Q1 2022 itself ended down: the S&P 500 returned about ‑5.2% for the quarter, and the Nasdaq Composite about ‑9.6%.(statmuse.com) Rather than a quick dip then renewed bull market, selling continued: for full‑year 2022 the S&P 500 fell about ‑19.4%, its worst year since 2008,(spglobal.com) and the Nasdaq had deeply negative returns in Q2 and remained down each quarter of 2022.(statmuse.com) Risk assets did not simply “get back in” after a short Q1 wobble; they went through a sustained bear market before recovering in 2023.

Because (a) the low‑volatility condition he described didn’t persist, (b) inflation clearly was not largely resolved by ~100 bps of hikes, and (c) markets did not experience only a brief Q1 pullback followed by an immediate, durable rebound in risk assets, the prediction does not match what actually happened.