A 25 Basis Point Cut Seen as the Base Case

According to Bassi, the most likely outcome is a 25 basis point rate cut. Despite weaker labor market figures, he noted that inflation remains stubbornly high, which makes a more aggressive 50 basis point reduction far less likely.

Recession Odds and Market Sentiment

Bassi currently estimates the probability of a U.S. recession at around 40%. Still, financial markets expect only a modest easing cycle due to concerns over growth risks. He also touched on political dynamics, referencing the removal of Fed Governor Lisa Cook, but emphasized that the central bank’s independence remains intact.

If the current signs of weakness prove to be temporary, Bassi expects the Fed to pursue a shallow rate-cutting path, which could result in limited pullbacks in risk assets and a stronger U.S. dollar.

Markets Price in a High Probability of a Cut

Investor expectations strongly align with Bassi’s view. Futures markets now assign an 88% probability to a 25 basis point cut at the September meeting. This conviction has been reinforced by the release of disappointing labor market data: just 22,000 jobs added in August and an unemployment rate rising to 4.3%.

Other Institutions Weigh In

• Citi Chief Economist Andrew Hollenhorst argued that weak data supports rate cuts but does not justify a larger 50 basis point move.

• Nomura’s David Seif suggested the Fed could pursue so-called “insurance cuts” to guard against labor market weakness.

• Apollo’s Chief Economist Torsten Slok projected that despite inflation remaining above target, the easing cycle is likely to continue.

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Key Messages from Schmid and Bostic

Fed official Schmid noted that the final stage of fighting inflation is proving particularly difficult, adding that price growth is more likely to remain closer to 3% rather than the 2% target. Schmid stated, “I am not in a hurry to cut interest rates. Markets and rate spreads are in good shape; we need definitive data before moving the policy rate.”

Meanwhile, Bostic emphasized that the Fed’s current stance is designed to bring inflation back to the 2% target. However, he also admitted that inflation remains well above this level and that trends in the labor market may pose risks. According to Bostic, a rate cut is still an option for this year, but any decisions must be consistent and strictly data-driven.

Markets Eye Powell’s Jackson Hole Speech

Following these remarks, all eyes are now on the Jackson Hole Symposium. Held annually in Wyoming, the event is seen as one of the most critical gatherings for the global economy. Tomorrow, on Friday, August 22, Fed Chair Jerome Powell will deliver his speech — a particularly significant one as his term is set to end next year. It may be Powell’s final opportunity to send strong signals from the Jackson Hole stage.

Investors are eager to see how Powell will balance concerns over a weakening labor market with the persistence of sticky inflation.

CME Group FedWatch Tool Data

According to the CME FedWatch Tool, market probabilities for rate adjustments are as follows: a 0% chance for the 375-400 bps range, a 79.2% chance for the 400-425 bps range, and a 20.8% chance for the current 425-450 bps range.

This outlook suggests that markets currently see a 25 bps cut as the more likely short-term scenario.

Also, click to read our article, “What to Expect from Powell at the Jackson Hole Meeting?”

What to Expect from Powell at the Jackson Hole Meeting?

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A New Move From “Asia’s Strategy” – Metaplanet

Often referred to as “Asia’s Strategy”, Metaplanet made a public announcement on Friday confirming its intention to issue perpetual preferred shares to support its Bitcoin accumulation plan. The company emphasized that this initiative is a key component of its “Bitcoin Strategy.”

“The company intends to actively pursue equity financing as part of its ‘Bitcoin Strategy,’ which aims to acquire 210,000 BTC by the end of 2027. The introduction of Bitcoin-backed preferred shares represents a pioneering step to fill a market gap.”

Corporate Accumulation on the Rise

This major financial move came just a day after it was reported that corporate crypto holdings have surpassed $100 billion in total value. Notably, Bitcoin accounts for $93 billion of that amount. The continued accumulation by companies like Metaplanet and Strategy, combined with expanding global money supply, suggests that Bitcoin price could rise above $132,000 by the end of 2025.

Strategy’s Parallel Effort

Strategy, which holds the title of the world’s largest corporate Bitcoin treasury, is also pursuing similar capital-raising strategies. On July 22, the company introduced a new class of Bitcoin-backed stock, pegged at $100 per share, with an annualized dividend rate of 9%.

A New Macro Catalyst for Bitcoin May Be Approaching

While summer months are generally associated with lower market liquidity, a major macroeconomic catalyst for Bitcoin may be just around the corner—possibly as early as September.

According to a research report published Friday by Matrixport, attention in Washington is expected to shift to fiscal matters once Congress returns from its summer recess after Labor Day on September 2. The report highlights:

“Fiscal uncertainty has historically been a strong tailwind for hard assets, and Bitcoin is now at the center of this narrative.”

Despite the impact of US Crypto Week and ongoing corporate accumulation, Matrixport also pointed out that “the real macro driver may be hiding in plain sight.”

Interest Rate Outlook: High Probability of Status Quo

As of now, markets are pricing in a 60.8% probability that the Federal Reserve (Fed) will keep interest rates unchanged during the next FOMC meeting scheduled for September 17. This estimate is based on the latest data from CME Group’s FedWatch Tool.

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The post Metaplanet Plans to Raise $3.7 Billion to Buy Bitcoin! appeared first on Coin Engineer.

Short-Term Pause, Long-Term Signals

The Fed’s likely decision to maintain its current rate level in July signals a “wait and see” approach. This could encourage investors to reassess their long and short positions, especially in highly volatile markets like crypto. Market participants often shift their risk exposure based on the Fed’s tone and forward guidance.

Is a Rate Cut on the Horizon?

Attention is now turning to the September Fed meeting, where speculation is building around a possible 25 basis point rate cut. According to the same group of economists, 56 out of 105—more than half—anticipate a rate reduction in September. Furthermore, around two-thirds of participants expect at least one or two cuts before the end of 2025.

Such a move could inject fresh liquidity into the market and boost investor appetite for risk. Historically, lower interest rates have served as a catalyst for rallies in crypto markets, as reduced yields make alternative assets like Bitcoin more attractive. However, potential inflation risks and global geopolitical tensions remain key variables that could alter this outlook.

Market Outlook

For now, a July hold may keep markets in a sideways or cautious mode. But if the Fed signals a shift toward easing in September, traders may begin to front-run that move, possibly increasing volatility in both traditional and digital asset classes.

While nothing is guaranteed, investors should watch for cues in Fed statements and remain agile in managing their portfolios, particularly in sectors like cryptocurrencies, where monetary policy shifts often trigger swift market reactions.

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The post FED Rate Cut Expectations: “Stable in July, Possible in September” appeared first on Coin Engineer.

What Do U.S. Jobless Claims Data Mean?

Jobless claims tend to rise during periods of economic slowdown. However, the figure released this week shows that the U.S. economy continues to remain resilient on the employment front. Although seasonal effects during the summer months can cause fluctuations, the overall trend being downward is notable.

According to experts, the 221K figure ranks among the lowest claim levels in the post-pandemic period. This suggests that employers are inclined to retain their existing workforce and that layoffs remain limited.

Crucial for the Fed’s Roadmap

For the Federal Reserve (Fed), developments in the labor market play a critical role in shaping monetary policy. Especially during the ongoing fight against inflation, employment data carry important signals regarding the Fed’s timing for potential rate cuts.

Low jobless claims indicate that signs of overheating in the economy persist, which may lead the Fed to act cautiously when considering a possible interest rate reduction.

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US Unemployment Claims and GDP Data Released

In recent minutes, key economic data from the United States was disclosed. These figures have the potential to directly influence the Federal Reserve’s (FED) interest rate decisions. Additionally, the released data may shape the price movements of Bitcoin (BTC) and other altcoins. Here are the important economic figures from the US:

• Unemployment Claims: 242K (Expectation: 222K)
• Gross Domestic Product (GDP): 2.3% (Expectation: 2.3%)

The higher-than-expected Unemployment Claims figure of 242K may raise concerns about the pace of economic recovery, potentially exerting pressure on the FED’s interest rate hikes.

On the other hand, the 2.3% GDP growth figure, while in line with expectations, suggests that the growth rate remains limited. These numbers could introduce uncertainty into the crypto market, particularly for Bitcoin (BTC). As investors weigh the potential impacts of interest rate hikes and economic slowdown, volatility in Bitcoin and other altcoins may increase.

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