The Federal Reserve meets on October 27-28 with inflation moving the wrong way. September CPI rose 3.7% year over year, up from 3.4% in August and above the 3.6% forecast, while core CPI came in at 2.6%. The Fed already raised rates in September to a range of 3.75%-4.00%, its first hike since 2023.
Odds of a second hike jumped to roughly 50% after the CPI report, then fell to about 15% on CME FedWatch after Fed Chair Kevin Warsh declined to signal another increase. Speaking at an IMF event on October 16, he said “I don’t prejudge meetings.” A weak September jobs report, with only 29,000 positions added, also complicates the case for tightening. Polymarket still prices a December hike at about 79%, which suggests traders expect a delay rather than a reversal.
For Bitcoin this matters because higher yields tend to pull money away from risk assets. After the CPI release, Treasury yields climbed to multi-decade highs, with the 10-year above 5%. BTC slipped about 1.5% that day, and more than $281 million in crypto derivatives positions were liquidated.
The tone of Warsh’s press conference and any hint about December will likely drive the next move. The next CPI report arrives on November 10.
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Sources:
- Decrypt: Bitcoin Falls as Hot Inflation Puts a Fed Hike Back on the Table
- Benzinga: October Fed Hike Odds Collapse After Warsh Remarks
- FinanceFeeds: Fed Rate Hike in October? Odds After the 3.7% CPI
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