Let’s talk about the two most likely scenarios.
I. Hike rates by 25bp (the market has priced in 90%)
This is currently the most likely outcome, but it can be split into a hawkish and a dovish version.
Hawkish: After 2.30, Warsh said that the recent improvement in inflation is not very convincing; energy prices continue to feed through to inflation. Most seriously, he didn’t say that this rate hike is enough. Then, looking further at the dot plot, we also发现 there could be another rate hike toward year-end.
This leads to “Higher for Longer.” The market will continue to price in the possible next rate-hike cycle. Refer to the 2022 rate-hike cycle—when it started, the crypto market’s走势 began to move accordingly. The key to watch is whether 2Y/10Y real yields on the DXY rise. Combined with the CLARITY Act being blocked, crypto could crash hard.
Dovish: After that, Warsh said that existing economic policies can effectively address inflation, with no further rate-hike idea. A one-off price shock caused by energy may not necessarily translate into sustained inflation. Add the dot plot, and it could be interpreted as this year basically coming to an end, with the possibility of choosing to cut rates in 2027 when timing is right.
This scenario would cause after-the-hike rate action to still push higher, and instead would be supportive for the stock market and crypto.
II. No rate hike — also two cases
The market currently believes the probability is under 10%.
No rate hike + dovish: Inflation cools off; we should observe patiently. Then we can interpret it as there being no rate-hike cycle or it being delayed, which would show up as 2Y DXY falling and a collective rise in NQ, BTC, ETH, and altcoins.
There is also a bad scenario: No rate hike + extremely hawkish remarks
Warsh’s speech suggests inflation is not falling, and rate hikes may become more appropriate. Energy and inflation are concerning. Combined with the dot plot, it shows that by end-2026, the level starts with 4%. That would mean adding hikes later and then continuing with successive rate hikes. The outcome would be a surge at first—followed by everything giving back and turning into a drop.
Of course, what I hope for in trading is rate hikes + a dovish tone. Stay tuned #美联储加息是否已成定局
I. Hike rates by 25bp (the market has priced in 90%)
This is currently the most likely outcome, but it can be split into a hawkish and a dovish version.
Hawkish: After 2.30, Warsh said that the recent improvement in inflation is not very convincing; energy prices continue to feed through to inflation. Most seriously, he didn’t say that this rate hike is enough. Then, looking further at the dot plot, we also发现 there could be another rate hike toward year-end.
This leads to “Higher for Longer.” The market will continue to price in the possible next rate-hike cycle. Refer to the 2022 rate-hike cycle—when it started, the crypto market’s走势 began to move accordingly. The key to watch is whether 2Y/10Y real yields on the DXY rise. Combined with the CLARITY Act being blocked, crypto could crash hard.
Dovish: After that, Warsh said that existing economic policies can effectively address inflation, with no further rate-hike idea. A one-off price shock caused by energy may not necessarily translate into sustained inflation. Add the dot plot, and it could be interpreted as this year basically coming to an end, with the possibility of choosing to cut rates in 2027 when timing is right.
This scenario would cause after-the-hike rate action to still push higher, and instead would be supportive for the stock market and crypto.
II. No rate hike — also two cases
The market currently believes the probability is under 10%.
No rate hike + dovish: Inflation cools off; we should observe patiently. Then we can interpret it as there being no rate-hike cycle or it being delayed, which would show up as 2Y DXY falling and a collective rise in NQ, BTC, ETH, and altcoins.
There is also a bad scenario: No rate hike + extremely hawkish remarks
Warsh’s speech suggests inflation is not falling, and rate hikes may become more appropriate. Energy and inflation are concerning. Combined with the dot plot, it shows that by end-2026, the level starts with 4%. That would mean adding hikes later and then continuing with successive rate hikes. The outcome would be a surge at first—followed by everything giving back and turning into a drop.
Of course, what I hope for in trading is rate hikes + a dovish tone. Stay tuned #美联储加息是否已成定局