U.S. CPI rose 0.4% month over month in October, above expectations of 0.3%—a 0.1 percentage point surprise. Deutsche Bank promptly extended its rate-hike forecast to three consecutive hikes.
According to PANews, Deutsche Bank expects the Federal Reserve to raise rates by 25 basis points in December this year and in January and March next year, lifting the target range for the federal funds rate from 3.75%–4% to 4.50%–4.75%. CME FedWatch shows that markets see the probability of a December rate hike as nearly 99%. Deutsche Bank also noted that Waller’s remarks made a 50-basis-point hike possible, though it is not part of the baseline scenario.
From a market perspective, another inflation surprise has narrowed the Fed’s room to pivot. An extended rate-hiking path implies higher real U.S. interest rates and pressure on risk-asset valuations, putting BTC and ETH closer to high-beta risk assets. Scenario one to watch: Can upcoming employment and inflation data give the Fed room to ease? Scenario two: Will the rate-hike pace implied by CME rate futures continue to be revised upward? Which side are you watching more closely—cooling data or further upward revisions to rate-hike expectations?
Image 1: U.S. October CPI exceeds expectations; Deutsche Bank forecasts three consecutive Fed rate hikes · Screenshot of source page
Image source: https://www.panewslab.com/zh/articles/01a1c6be-d326-743a-9060-45e91fa14707
According to PANews, Deutsche Bank expects the Federal Reserve to raise rates by 25 basis points in December this year and in January and March next year, lifting the target range for the federal funds rate from 3.75%–4% to 4.50%–4.75%. CME FedWatch shows that markets see the probability of a December rate hike as nearly 99%. Deutsche Bank also noted that Waller’s remarks made a 50-basis-point hike possible, though it is not part of the baseline scenario.
From a market perspective, another inflation surprise has narrowed the Fed’s room to pivot. An extended rate-hiking path implies higher real U.S. interest rates and pressure on risk-asset valuations, putting BTC and ETH closer to high-beta risk assets. Scenario one to watch: Can upcoming employment and inflation data give the Fed room to ease? Scenario two: Will the rate-hike pace implied by CME rate futures continue to be revised upward? Which side are you watching more closely—cooling data or further upward revisions to rate-hike expectations?
Image 1: U.S. October CPI exceeds expectations; Deutsche Bank forecasts three consecutive Fed rate hikes · Screenshot of source page
Image source: https://www.panewslab.com/zh/articles/01a1c6be-d326-743a-9060-45e91fa14707
