Regarding the Fed’s rate hike in October, the three-in-command at the Federal Reserve stepped on the brakes.
On September 29, New York Fed President William said that after the September rate hike of 25 basis points (taking the range to 3.75%-4%, the first since 2023), there is now no urgency and there is time to gather more information. The market immediately cut the probability of a rate hike at the October 27-28 meeting from about 70% at the start of the week to around 50%.
He also left the door open: if the economy evolves as expected, it would be appropriate to add one more hike later in the year—widely interpreted as pointing to December. Evercore ISI believes that “skipping October and adding again in December” best matches his wording; on the same day, Governor Barr’s stance was more hawkish, saying that multiple rate hikes may be needed.
My view is: a pause in October has essentially already been priced in, but the December move has not been sufficiently priced—this is one of the reasons <$BTC > is stuck around $84,000; as long as real-rate expectations don’t fall, valuations for risk assets hit a ceiling.
Do you bet on a hike in October or in December?
On September 29, New York Fed President William said that after the September rate hike of 25 basis points (taking the range to 3.75%-4%, the first since 2023), there is now no urgency and there is time to gather more information. The market immediately cut the probability of a rate hike at the October 27-28 meeting from about 70% at the start of the week to around 50%.
He also left the door open: if the economy evolves as expected, it would be appropriate to add one more hike later in the year—widely interpreted as pointing to December. Evercore ISI believes that “skipping October and adding again in December” best matches his wording; on the same day, Governor Barr’s stance was more hawkish, saying that multiple rate hikes may be needed.
My view is: a pause in October has essentially already been priced in, but the December move has not been sufficiently priced—this is one of the reasons <$BTC > is stuck around $84,000; as long as real-rate expectations don’t fall, valuations for risk assets hit a ceiling.
Do you bet on a hike in October or in December?