š 90% of people are betting on tonightās rate hike. I think it will happen, but I donāt agree with the idea of a ārestart of the rate-hiking cycle.ā
Tomorrow at around 2:00 a.m. Beijing time, the Federal Reserve will release its interest rate decision. There will also be a press conference and economic projections at 2:30 a.m. The market is currently pricing this hike at just over 60% before the CPI is released, and then it gradually climbed to nearly 90%.
First, letās look at why it could happen. In August, the core CPI rose 0.3% month over month, higher than the expected 0.2%āthe biggest single-month increase since April. Headline CPI rose 0.4% month over month and 3.4% year over year, and gasoline alone contributed one third of the monthly increase. Energy is driving itāthis is a supply-side story.
But core year over year has eased from 2.5% to 2.4%.
So my view is: this time they will raise rates by 25 basis points. In nature, itās more like an insurance-style calibrationānot the starting point of a new rate-hiking cycle. The pace afterward depends on the dot plot at 2:30. Tonightās rate decision itself isnāt that important. If the dot plot suggests there will be a second move later in the year, then the marketās current optimistic pricing needs to be recalculated.
Hereās how I account for the three asset classes.
$BTC is currently at 75,591, down 3.09% over the past 24 hours, and todayās low was 74,967. Itās been selling off ahead of the pack. With the 90% pricing, cutting 25 basis points isnāt new information. If the bad news is fully digested, a rebound is likely. But if the dot plot comes in hawkish, then any rebound is an opportunity to reduce exposure. What Iām watching is where the first daily candle after the decision closes.
Tech stocks are even more direct. The Nasdaqās latest close is 25,981.57, down 0.78%. The higher the valuation, the more sensitive it is to the discount rate. As long as the dot plot hints at another move this year, the āvaluation-killingā story will have to continue to play out.
Gold is actually steady. The COMEX December contract is quoted at $4,327.1. Itās down only 0.13%. Rising real rates weigh on it, but central bank gold purchases and safe-haven demand support it. Theyāre pulling in opposite directions. If the hike is what digs the pit, Iām inclined to treat it as a window for building positions in batchesānot as a reason to stop out.
As for my own positioningāhonestly, Iām currently in cash with no position. I went heavy before the decision and bet on direction; when Iām right, itās luck, and when Iām wrong, itās discipline. Once the dot plot comes out and the first daily candle has closed, Iāll reassess whether BTC is back above 76,000 or breaks down below 74,900.
#ē¾čåØå ęÆęÆå¦å·²ęå®å±
Tomorrow at around 2:00 a.m. Beijing time, the Federal Reserve will release its interest rate decision. There will also be a press conference and economic projections at 2:30 a.m. The market is currently pricing this hike at just over 60% before the CPI is released, and then it gradually climbed to nearly 90%.
First, letās look at why it could happen. In August, the core CPI rose 0.3% month over month, higher than the expected 0.2%āthe biggest single-month increase since April. Headline CPI rose 0.4% month over month and 3.4% year over year, and gasoline alone contributed one third of the monthly increase. Energy is driving itāthis is a supply-side story.
But core year over year has eased from 2.5% to 2.4%.
So my view is: this time they will raise rates by 25 basis points. In nature, itās more like an insurance-style calibrationānot the starting point of a new rate-hiking cycle. The pace afterward depends on the dot plot at 2:30. Tonightās rate decision itself isnāt that important. If the dot plot suggests there will be a second move later in the year, then the marketās current optimistic pricing needs to be recalculated.
Hereās how I account for the three asset classes.
$BTC is currently at 75,591, down 3.09% over the past 24 hours, and todayās low was 74,967. Itās been selling off ahead of the pack. With the 90% pricing, cutting 25 basis points isnāt new information. If the bad news is fully digested, a rebound is likely. But if the dot plot comes in hawkish, then any rebound is an opportunity to reduce exposure. What Iām watching is where the first daily candle after the decision closes.
Tech stocks are even more direct. The Nasdaqās latest close is 25,981.57, down 0.78%. The higher the valuation, the more sensitive it is to the discount rate. As long as the dot plot hints at another move this year, the āvaluation-killingā story will have to continue to play out.
Gold is actually steady. The COMEX December contract is quoted at $4,327.1. Itās down only 0.13%. Rising real rates weigh on it, but central bank gold purchases and safe-haven demand support it. Theyāre pulling in opposite directions. If the hike is what digs the pit, Iām inclined to treat it as a window for building positions in batchesānot as a reason to stop out.
As for my own positioningāhonestly, Iām currently in cash with no position. I went heavy before the decision and bet on direction; when Iām right, itās luck, and when Iām wrong, itās discipline. Once the dot plot comes out and the first daily candle has closed, Iāll reassess whether BTC is back above 76,000 or breaks down below 74,900.
#ē¾čåØå ęÆęÆå¦å·²ęå®å±
