Fed Rate Decision: What Markets and Bitcoin Traders Can Expect — SkimNews
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- Federal Reserve will announce its interest-rate decision at 2 p.m. ET today, followed by Chair Kevin Warsh's press conference; CME FedWatch and prediction markets both put the odds of a hold above 90%.
- CME FedWatch and prediction markets assign 75% to 80% odds to another quarter-point hike at the Dec. 8-9 meeting, after September's unanimous 12-0 increase put the target range at 3.75%-4.00%.
- Labor Department reported that consumer prices rose 3.7% in the 12 months through September, with gasoline alone increasing 9.1% during the month.
- Oil traded near $100 a barrel as the U.S.-Iran war squeezed global supply, lifting gasoline and shipping costs that the source says eventually push inflation higher.
- Bitcoin traded around $80,700, just below a support-now-resistance zone where sellers repeatedly stopped rallies this year; the 10-year Treasury yield was near 5% after peaking at 5.31% on Oct. 5, and higher Treasury returns tend to draw money out of crypto and stocks.
- Kevin Warsh's August Jackson Hole speech was followed by the liquidation of about $481 million in crypto positions within 24 hours, more than $360 million of them bets on higher prices.
- Federal Reserve's July vote was 9-3, with three members favoring a hike; a tightening dissent today would suggest December is close to locked in, and no new economic projections are due until December.
Why it matters: With the 3.75%-4.00% federal funds rate already setting the baseline for credit-card and loan costs, a tightening dissent against July's 9-3 split would make the Dec. 8-9 quarter-point hike close to locked in. Higher Treasury returns compete with Bitcoin at $80,700, with money tending to drift out of crypto and stocks toward higher-yielding government debt.
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