by Coinstrooper Crypto Articles
Quick Take
  • Two weeks ago, the Federal Reserve raised interest rates.
  • This week, five data releases will show whether it does it again in October.
  • The Fed’s chair says single numbers should not drive policy.
  • Traders are still pricing the next move off this week’s data.

What Happened

Two weeks ago, the Federal Reserve raised interest rates. This week, five data releases will show whether it does it again in October.

The Fed’s chair says single numbers should not drive policy. Traders are still pricing the next move off this week’s data.

On September 16, the Fed lifted its benchmark rate to a range of 3.75% to 4%. Inflation “remains elevated,” the policy statement said.

Market Context

Rate traders price roughly a 64% chance of another hike on October 28.

The bank’s September statement said it “will continue to raise the policy interest rate.” Japan’s rate still sits more than 2.5 percentage points below the Fed’s. Signs of faster hikes in Tokyo would narrow that gap, which can ripple through global bond markets.

The Personal Consumption Expenditures (PCE) index is the inflation number the Fed trusts most. It also tracks how much Americans spend. Its “core” version drops volatile food and energy prices.

Why It Matters

The Fed Raised Rates and Refused to Signal Its Next Move

In June, BeInCrypto reported that Bank of America expected three Fed rate hikes this year, starting in September.

Higher rates make savings and bonds pay more. That pulls money away from riskier bets like tech stocks and Bitcoin (BTC). Right now, Bitcoin trades near $84,728, according to BeInCrypto data.

Core PCE rose 3.3% in the year to July, the Bureau of Economic Analysis (BEA) said. August’s reading is forecast at 3.4%. The Fed’s target is 2%.

Spending is forecast to climb 0.5% in August. That would be the biggest monthly jump in over a year.

Details

At his press conference, Chair Kevin Warsh refused to promise a second hike.

“Trends matter. Data points are noisy. Data point dependence is a dangerous preoccupation.”

1. Monday, Bank of Japan Minutes

The Bank of Japan (BOJ) publishes the minutes of its July 30 to 31 meeting on Monday morning, Japan time, its calendar shows.

Minutes are the written record of what board members argued. These cover the meeting between two hikes. The BOJ raised its rate to about 1% in June, then to about 1.25% on September 18.

Assets in play. Japanese government bonds, the yen, US Treasury yields, and Bitcoin.

2. Wednesday, PCE Inflation

Assets in play. Treasury yields, the US dollar, the S&P 500, the Nasdaq, and Bitcoin.

3. Wednesday, GDP

The same morning, the BEA publishes its third and final estimate of second-quarter growth. Gross domestic product (GDP) measures everything the economy produces.

The second estimate showed growth of 1.5% at an annual rate, down from 2.1% in the first quarter, BEA data shows. A stronger revision would give the Fed more room to keep rates high.

Assets in play. Treasury yields, the US dollar, and the S&P 500.

4. Thursday, ISM Manufacturing Index