The Federal Reserve released the minutes from the July FOMC meeting last week. They revealed that many of the FOMC members still think the inflation fight is far from over.

With inflation still well above the Committee's longer-run goal and the labor market remaining tight, most participants continued to see significant upside risks to inflation, which could require further tightening of monetary policy."

Peter said they should be worried about an upside surprise with inflation.

I've been saying to take your eyes off the rearview mirror and look at everything that's happening in the windshield. Forget about the fact that the CPI has gone down from new to three. We're now going back up."

During his press conference after the July meeting, Federal Reserve Chairman Jerome Powell gave markets some hope that rates could come down next year — even before the central bank hit its 2% target. But as Peter pointed out, if the FOMC members are still concerned about upside inflation, that means the Fed will have to reassess cutting rates next year.

In fact, the Fed might actually have to raise rates more than they thought. In other words, it might not just be one more rate hike. Maybe the Fed has got to go up to 6%. Maybe they've got to go higher than that."

This spooked the markets last week, and we saw a pretty significant selloff in both stocks and bonds. Gold also fell below $1,900 an ounce. Peter called it a "buy area."

Bond yields have risen close to the high point in this cycle. And as Peter pointed out, they should be higher given the amount of debt in the economy.