BTC, MACRO & OTHER DISASTERS
TODAY’S EPISODE: PCE
Today’s data only confirms this: the US economy is slowing down, but inflation is still far from allowing the Fed to cut rates and fix everything. PCE at 3.7% year over year. Core at 3.3%. In the quarter, core accelerated to 3.6% (above the expected 3.4%). GDP revised to a meager 1.5%. GDP price index at 6.4%.
I.E.:
weaker growth + inflation still pressuring things. This is exactly where Treasuries come into play. The market is trying to balance three things at the same time:
• the economy losing momentum
• inflation above target
• the government financing massive deficits
It doesn’t matter that the Fed wants to cut rates.
Long yields depend on inflation expectations, debt supply, and the investors’ risk premium.
Consumers are also slowing down: income +0.4%, spending only +0.2%. Durable goods +1.1% (excluding transport, only +0.4%).
I.E.:
inflation hasn’t disappeared, but demand isn’t soaring anymore.
And together with what was already on the radar:
• elevated oil
• the Hormuz shock
• Treasuries under pressure
• higher funding costs
• deterioration in private credit
• increasing intervention from the Treasury
The story becomes much more interesting than just staring at the Fed’s rate-cut calendar. In the short term, Bitcoin is still being held back by persistent inflation + high yields.
But if growth worsens and authorities need to increase liquidity while the debt market demands more intervention, the conversation changes: can the system finance its own debt without causing a financial contraction?
That’s why, at this moment, my focus continues to be on:
• Treasuries
• Liquidity
• Financial conditions
More than in any single isolated Fed decision.
The big question of the cycle remains: how much stimulus the system will need before absorbing everything without reigniting inflation.
TODAY’S EPISODE: PCE
Today’s data only confirms this: the US economy is slowing down, but inflation is still far from allowing the Fed to cut rates and fix everything. PCE at 3.7% year over year. Core at 3.3%. In the quarter, core accelerated to 3.6% (above the expected 3.4%). GDP revised to a meager 1.5%. GDP price index at 6.4%.
I.E.:
weaker growth + inflation still pressuring things. This is exactly where Treasuries come into play. The market is trying to balance three things at the same time:
• the economy losing momentum
• inflation above target
• the government financing massive deficits
It doesn’t matter that the Fed wants to cut rates.
Long yields depend on inflation expectations, debt supply, and the investors’ risk premium.
Consumers are also slowing down: income +0.4%, spending only +0.2%. Durable goods +1.1% (excluding transport, only +0.4%).
I.E.:
inflation hasn’t disappeared, but demand isn’t soaring anymore.
And together with what was already on the radar:
• elevated oil
• the Hormuz shock
• Treasuries under pressure
• higher funding costs
• deterioration in private credit
• increasing intervention from the Treasury
The story becomes much more interesting than just staring at the Fed’s rate-cut calendar. In the short term, Bitcoin is still being held back by persistent inflation + high yields.
But if growth worsens and authorities need to increase liquidity while the debt market demands more intervention, the conversation changes: can the system finance its own debt without causing a financial contraction?
That’s why, at this moment, my focus continues to be on:
• Treasuries
• Liquidity
• Financial conditions
More than in any single isolated Fed decision.
The big question of the cycle remains: how much stimulus the system will need before absorbing everything without reigniting inflation.
