Yesterday we talked about (the Clear Act). Now let’s talk about next Wednesday’s FOMC interest-rate decision meeting—both of these are events that will have a massive impact on the market.
First, the (Clear Act) passes, which could potentially boost crypto—if it doesn’t pass, it could also hurt sentiment and pull it down a notch. Of course, the (Clear Act) affects crypto; it may not cause a huge impact on US stocks.
But the FOMC meeting will cause huge volatility in US stocks, and then crypto will definitely be dragged along too. These past two days, during the daytime, US stocks have seen large declines. Yesterday, the decline was 1.6%; in the evening it recovered somewhat. Today during the daytime, it dropped another 0.6%, and crypto was also affected to some extent.
So if the FOMC meeting conclusion is a 25 bps rate hike, U.S. stocks could see a drop of 2% or more. At the moment, U.S. stocks are consolidating sideways at high levels in a flag-like pattern, so this catalyst will at least affect the market and make the consolidation last longer.
Although in the end, in October’s earnings season, I think it will most likely break out of a consolidation pattern and continue moving upward, but this news catalyst has a huge short-term impact and must be watched closely. Similarly for the crypto sector—it may also pull back, and that would be a great second entry point.
But I think the probability of the Fed hiking rates is not high. My judgment is that they will most likely do nothing. I mentioned the reasons before—go back and look at the earlier articles.
So today there was another piece of news that’s been trending: the 10-year U.S. Treasury yield broke 5%. In the data we looked at in the Sept. 9 article, the 10-year yield was 4.8%, meaning it rose by 0.2% over a week. Then Sept. 9 was the day the U.S. Treasury began buying back Treasuries. After running for about a week now, the Treasury yields are not going down at all.
It says that the Ministry of Finance’s repo operations are currently “ineffective” because the Ministry of Finance is currently buying back $6 billion per day, which is below the market’s expectation of $8–10 billion, so the market isn’t buying it.
And right now, the only thing that can keep this down is the Fed. Why is it going up? Because the market expects the Fed to “hike rates”!
In fact, as long as the Fed cuts rates, it can completely push this down.
So this FOMC meeting will most likely not raise rates.
One more thing: Vance just took office, so he only dares to make some noise. People say “new officials take office with three fires,” but he also isn’t really daring to make random moves.
Because one side is unfavorable inflation caused by high oil prices. Everyone in the market is saying they need to hike rates—so they’re basically putting it on the fire to roast.
On one side, there’s high fiscal spending and Trump’s threats; on the other, Treasury yields are rising and U.S. stocks have been falling consecutively.
The pressure on both sides is actually quite significant. So in order not to offend either side, standing pat this time is actually the best solution. After all, after September there are still two more FOMC meetings—there will be decision points then. If we don’t act now, we won’t be wrong.
You have to know that if this decision is wrong once, the cost is extremely high. Better not to do it than to make the wrong move—that should be the most likely approach. $BTC #美联储加息是否已成定局
