CME Data: Where Do Rate Expectations Stand?

The FedWatch Tool shows a divided market outlook ahead of the December 10 FOMC meeting:

• 350–375 bps: 52.1%

• 375–400 bps (current level): 47.9%

The narrow gap between the two outcomes highlights persistent uncertainty. While the market is leaning slightly toward a rate cut, confidence remains weak and highly sensitive to incoming data.

Mixed Signals From Federal Reserve Officials

Comments from Fed policymakers offer little clarity regarding the December decision. Their statements reflect both caution and concern, making it difficult for markets to form a definitive expectation.

Fed official Hammack outlined several risks and pressures shaping the outlook:

• The unemployment rate is near its maximum sustainable level.

• Inflationary pressures remain elevated.

• Monetary policy may need to stay “restrictive” for longer.

• Inflation is still high and appears to be firming rather than easing.

• Softening labor market conditions are complicating the Fed’s employment mandate.

These remarks imply that the Fed may not be in a rush to pivot toward easing.

Similarly, Neel Kashkari maintains a cautious stance, emphasizing that inflation remains around 3%. He noted that he has “no strong inclination” toward a December rate cut at this stage.

Data Gaps Add to Market Uncertainty

The 43-day U.S. government shutdown created additional complications for economic forecasting. The disruption prevented the release of complete labor-market data for October.
White House officials acknowledged that the true unemployment rate for the month may remain unknowable.

Senior Adviser Hassett explained that only part of the employment report could be produced, meaning the unemployment component would not be fully captured. Although the government reopened on October 13, the missing dataset adds another layer of ambiguity to the Fed’s assessment process.

A Fragile Outlook Ahead of the December Meeting

While market pricing has shifted back toward favoring a December rate cut, the direction remains far from certain. High inflation, uneven labor-market indicators and cautious commentary from Fed officials all challenge the likelihood of a decisive policy shift.

As a result, the December meeting is shaping up to be one of the most pivotal of the year — a moment when clearer data and a more unified stance from policymakers will be essential for establishing the next phase of monetary policy.

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Bitcoin as a Consumer Protection Issue

Kashkari said that he sees Bitcoin as “a consumer protection issue”, because some investors don’t know how crypto investments work. In addition, he said that crypto currencies are “so volatile that some people could be put in a lot of harm’s way.”

He also emphasised on how crpyto currencies don’t have any utility in the economy, other than it is just a nice toy that some people enjoy owning and trading. In addition, he mentioned crypto currencies usage in illegal activities by saying only uses he seen are cases where people are “trying to subvert banking regulations, get around either marijuana banking, or illicit activities.”

Lastly, he mentioned how there are still no regulations about Bitcoin, “it has been around for more than a decade, and more than a decade later, there’s still no legitimate use case in an advanced democracy.”

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Bitcoin’s Gains Trimmed, But Sentiment Remains Upbeat

At the time of writing, Bitcoin has retreated slightly, trading between $67,500 and $68,000. This pullback reflects a partial retracement of earlier gains after the US dollar index regained some lost ground.

Despite the volatility, total crypto market liquidations over the past 24 hours remain moderate at $199.2 million. Interestingly, long positions accounted for the majority of these liquidations, at $109.4 million, suggesting some profit-taking after Bitcoin’s initial surge. Notably, Bitcoin-specific liquidations were lower at $67.3 million, with shorts contributing $41.8 million.

Altcoins Struggle to Follow Bitcoin’s Lead

Unlike Bitcoin, most altcoins failed to capitalize on the initial momentum. Ethereum (ETH) currently trades around $3,283, down roughly 1% on the day. Solana (SOL) also dipped 2% and is priced at $181.7.

BNB (BNB) emerged as a relative outperformer amidst the market volatility. The token currently sits at $587, representing a 5% gain over the past 24 hours.

Fed Comments Spark Equity Sell-Off

The broader market rout in equities likely stemmed from comments made by Minneapolis Federal Reserve Bank President Neel Kashkari during a virtual event on LinkedIn. Kashkari expressed concerns about the Fed’s planned pace of interest rate cuts in the face of persistent inflation. This viewpoint contrasted with the more optimistic tone set by Fed Chairman Jerome Powell, who previously hinted at potential rate reductions later in the year.

The conflicting perspectives within the Fed regarding inflation management and economic growth triggered a swift sell-off in the stock market.

Bitcoin: A Safe Haven Asset?

In contrast to the declining equity markets, Bitcoin’s resilience during this period serves as a potential indicator of its growing acceptance as a safe-haven asset. Investors may be increasingly viewing Bitcoin as a hedge against traditional market instability and uncertainties surrounding future monetary policy decisions.

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