#fedratewatch
The Fed hike may be largely priced in, but the bigger question is what comes next.
Markets have shifted from debating potential rate cuts to pricing in a strong chance of a 25-basis-point hike on September 16. That would move the target range from 3.50%–3.75% to 3.75%–4.00%—the first increase since July 2023.
Still, focusing only on the hike may miss the broader signal.
August CPI came in at 3.4% year over year, with monthly inflation rising 0.4%. Oil has also moved above $100, creating another potential source of price pressure.
So the key question may not be whether a 25-basis-point hike happens. Markets are already preparing for it.
The more important question is whether Chair Kevin Warsh presents it as a one-time adjustment or signals the possibility of further tightening.
That distinction matters for crypto and other risk assets.
If the hike is fully anticipated and the guidance is less hawkish than expected, markets could absorb it relatively well. If the dot plot and press conference point toward additional hikes, liquidity conditions could tighten further.
That is the signal I’m watching most closely.
Am I missing something, or could the market be underestimating the follow-through risk because so much attention is focused on the headline hike?
The Fed hike may be largely priced in, but the bigger question is what comes next.
Markets have shifted from debating potential rate cuts to pricing in a strong chance of a 25-basis-point hike on September 16. That would move the target range from 3.50%–3.75% to 3.75%–4.00%—the first increase since July 2023.
Still, focusing only on the hike may miss the broader signal.
August CPI came in at 3.4% year over year, with monthly inflation rising 0.4%. Oil has also moved above $100, creating another potential source of price pressure.
So the key question may not be whether a 25-basis-point hike happens. Markets are already preparing for it.
The more important question is whether Chair Kevin Warsh presents it as a one-time adjustment or signals the possibility of further tightening.
That distinction matters for crypto and other risk assets.
If the hike is fully anticipated and the guidance is less hawkish than expected, markets could absorb it relatively well. If the dot plot and press conference point toward additional hikes, liquidity conditions could tighten further.
That is the signal I’m watching most closely.
Am I missing something, or could the market be underestimating the follow-through risk because so much attention is focused on the headline hike?
