At the Jackson Hole conference, the tough remarks by a U.S. Federal Reserve (Fed) official—Mr. Waller—about its determination to bring inflation back to the 2% target triggered a sharp repricing of interest rates across the entire market. Shortly after the event, Deutsche Bank forecast that the Fed will raise rates by an additional 25 basis points in both September and December. The CME FedWatch tool also recorded a steep jump, as the probability of cumulative increases of 50 basis points or more before the end of the year rose from 29% to 51%.
This shift is highly significant because it wipes out the prior optimistic expectations that the Fed would ease policy soon. Instead of a soft-landing scenario with a favorable rate-cut path, investors are forced to confront the reality that the level of the cost of capital will remain higher for longer than expected. The threshold for the Fed to reverse its current policy is very high, requiring upcoming macroeconomic data to deteriorate noticeably.
The reaction in traditional financial markets was swift and intense. The U.S. Treasury yield curve flattened noticeably, with the 2-year to 10-year spread narrowing by 7 basis points, indicating that the market is repricing the risk of slower growth in the short term. Precious metals immediately came under heavy profit-taking pressure as spot gold fell 3% to $4,463.24 per ounce, alongside net selling of more than 4.2 tonnes from the SPDR Gold Trust, while the Japanese yen hovered just near the sensitive 160 per $1 threshold.
For the crypto market, this tightening wave of expected policy is a headwind for speculative inflows. Global liquidity tightening will make $BTC and digital assets difficult to sustain their hot growth momentum in the near term, forcing capital to cluster defensively. The most plausible scenario in this phase is that crypto will continue a sideways, choppy trend with narrow trading ranges, waiting for additional labor-market and actual inflation data to confirm the Fed’s policy path. 📉
#fed #lai_suat #macroeconomics
This shift is highly significant because it wipes out the prior optimistic expectations that the Fed would ease policy soon. Instead of a soft-landing scenario with a favorable rate-cut path, investors are forced to confront the reality that the level of the cost of capital will remain higher for longer than expected. The threshold for the Fed to reverse its current policy is very high, requiring upcoming macroeconomic data to deteriorate noticeably.
The reaction in traditional financial markets was swift and intense. The U.S. Treasury yield curve flattened noticeably, with the 2-year to 10-year spread narrowing by 7 basis points, indicating that the market is repricing the risk of slower growth in the short term. Precious metals immediately came under heavy profit-taking pressure as spot gold fell 3% to $4,463.24 per ounce, alongside net selling of more than 4.2 tonnes from the SPDR Gold Trust, while the Japanese yen hovered just near the sensitive 160 per $1 threshold.
For the crypto market, this tightening wave of expected policy is a headwind for speculative inflows. Global liquidity tightening will make $BTC and digital assets difficult to sustain their hot growth momentum in the near term, forcing capital to cluster defensively. The most plausible scenario in this phase is that crypto will continue a sideways, choppy trend with narrow trading ranges, waiting for additional labor-market and actual inflation data to confirm the Fed’s policy path. 📉
#fed #lai_suat #macroeconomics