An October rate-hike pause is a “done deal”; the long-bond auction is the hidden risk
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No move in October—the probability priced in by traders has reached 78%, according to CME data. Vice Chair Jefferson, New York Fed President Williams, and Governor Bowman are all sending the same message: there’s no rush to act. The minutes due early tomorrow morning will most likely simply explain why rates were raised in September and why the Fed will pause for now. The market has already priced that in.
But the real test is long-term bonds. The 10-year Treasury yield touched 5.35% intraday, its highest level since April 2002. The key question is whether buyers will show up for tonight’s $39 billion 10-year Treasury auction. The minutes address “whether to raise rates”; the auction will show whether the bond market can still hold up.
In the near term, keep an eye on the minutes, but don’t expect any major surprises. The real volatility will come from the auction results—that’s tonight’s hidden risk. If Treasuries tank, risk assets won’t be spared; crypto markets will also come under pressure. Stay alert.$BTC $ETH $BNB
👇
No move in October—the probability priced in by traders has reached 78%, according to CME data. Vice Chair Jefferson, New York Fed President Williams, and Governor Bowman are all sending the same message: there’s no rush to act. The minutes due early tomorrow morning will most likely simply explain why rates were raised in September and why the Fed will pause for now. The market has already priced that in.
But the real test is long-term bonds. The 10-year Treasury yield touched 5.35% intraday, its highest level since April 2002. The key question is whether buyers will show up for tonight’s $39 billion 10-year Treasury auction. The minutes address “whether to raise rates”; the auction will show whether the bond market can still hold up.
In the near term, keep an eye on the minutes, but don’t expect any major surprises. The real volatility will come from the auction results—that’s tonight’s hidden risk. If Treasuries tank, risk assets won’t be spared; crypto markets will also come under pressure. Stay alert.$BTC $ETH $BNB