The Fed was supposed to CUT. Now Wall Street is betting on a HIKE.
August Core CPI just printed 0.3% MoM - hot. Energy ripping above $100 on Iran tensions. And Polymarket + CME FedWatch now show 85-92% chance of a 25bp hike on Sept 16 7b9ad5f6
This is not the pivot we waited for.
1. Will Powell Actually Hike?
Yes - this week is almost done deal.
> "Today's clean 0.3% core CPI print... all but locks in a Fed rate hike next week," - Principal Asset Management 7b9a
Why? The market itself is forcing the Fed's hand. Goldman Sachs said it best: The FOMC will want to avoid the market reaction that would follow from remaining on hold when the market is pricing a nearly 90% chance of a hike. 4ead
Is it a one-off?
This is the big question. Goldman says additional hikes are possible but not baseline. But others warn: After half a decade of above-target inflation, policymakers may conclude more than one hike is needed. 7b9a
If the Fed signals a cycle, watch out: "If it signals a cycle -- like, hey, we still have work to do -- I don't think it's going to be great for the market" 1e06
My take: One hawkish hike + pause. The new dot plot this week will tell everything.
2. If The Hike Lands - Who Wins, Who Bleeds?
BTC: Short-term PAIN, long-term GAIN?
Rate hike = stronger dollar = risk-off. Expect a quick flush to liquidate longs. But smart money knows: A final hike means the TOP of rates is in. Historically, BTC bottoms right before the last hike. Dip = opportunity.
Tech Stocks (Nasdaq): BEARISH short-term
Tech lives on cheap money. Higher rates crush valuations. If Fed hints at more hikes, Nasdaq gets hit hardest. If it's "one and done" - we rip.
Gold: BULLISH no matter what
Gold loves chaos. Oil >$100, Strait of Hormuz tensions, sticky inflation. Even with a hike, real rates won't stay high for long. Central banks are still buying. Gold is the hedge for a policy mistake.
Final Playbook:
Don't fight the Fed this week. Volatility incoming.
- Hike + dovish tone = BTC & Gold moon, Tech bounces
- Hike + hawkish tone = Everything dumps, cash is king for 2 weeks
What are you doing? Buying the dip or sitting in cash?
Drop your prediction below 👇