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taishiro
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The Fed's language is getting more hawkish, but market pricing is telling a slightly different story.
There is a difference between officials warning about further tightening and the market actually pricing in those moves. That gap matters for risk assets.
For Bitcoin, the immediate problem is liquidity. Higher rate expectations keep capital defensive and make it harder for speculative assets to attract fresh demand.
#FedHikeOutlookDivided
Elon 小马哥
#Federal Reserve officials signal rate hikes, December expectations still divided
On October 30, St. Louis Fed President Bullard said that to curb inflation, monetary policy needs to be tightened further soon; Dallas Fed President Logan was even more aggressive, directly stating that at least two more rate hikes of 25 basis points each are needed. Interestingly, market pricing for a December rate hike has fallen from 85% to between 70% and 80%. On the market, Bitcoin dipped slightly by 0.51%, still struggling in the mud.
The Federal Reserve is playing extreme pressure expectation management, but the market has started to develop "resistance".
Right now, it's a tug of war. Officials have to sound tough because inflation data is there; without some harsh words, how can inflation expectations be suppressed? The core contradiction now is that everyone has become jittery, in a "take it step by step" state.
What impact does this have?
In the short term, it is extremely suppressive. As long as the Fed's "rate hike sword" hangs overhead, global market liquidity won't ease. Large funds are extremely averse to uncertainty; as long as high interest rate expectations remain, they won't dare to throw real money into high-risk markets like crypto.
More importantly, on November 6, the October nonfarm payroll data will be released. This data is the judge of life and death going forward. If the employment data collapses, it means the economy is not doing well, and the Fed may not dare to hike; if employment remains strong, the Fed will definitely have the confidence to continue hawkish policies. Around the nonfarm data release, there will inevitably be another storm.
What do you think? $BTC
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