Fed minutes have markets dipping, traders calling for more rate hikes

The central bank is not yet done increasing interest rates, minutes from last month’s meeting reveal

article-image

Federal Reserve Chair Jerome Powell | Brookings Institute/"Jerome Powell" (CC license)

share

Minutes from the Federal Reserve’s June policy-setting meeting have markets in the red as investors speculate how many more rate hikes might be up central banker’s sleeves. 

The pace of rate hikes is expected to slow, central bankers said on Wednesday, but hikes nonetheless should be expected. 

“Many also noted that, after rapidly tightening the stance of monetary policy last year, the Committee had slowed the pace of tightening and that a further moderation in the pace of policy firming was appropriate in order to provide additional time to observe the effects of cumulative tightening and assess their implications for policy,” the minutes read. 

Minutes from last month show that central bankers are still concerned about persistent inflation, and what some traders were hoping would be a conclusion to the recent era of tight monetary policy might simply be a pause. In June, committee members elected to keep rates the same, marking the central bank’s first rate increase pause in 15 months. 

Crypto assets slid on the news, with bitcoin and ether down about 0.8% and 1.2%, respectively. Both are still in the green over the last month though, with bitcoin gaining close to 19% since early June and ether up around 6%. 

Equities dipped slightly in the moments after the release. The S&P 500 and Nasdaq Composite indexes lost about 0.2% and 0.1%, respectively. 

Traders are still largely anticipating a 25 basis point increase at the Fed’s next policy-setting meeting later this month. Markets seem to be pricing in an 89% likelihood of a small increase, according to data from CME Group. 

Bitcoin has managed to hold above $30,000, a key resistance level analysts have been watching, since June 23. A sustained rally is dependent on equity performance and macro indicators, analysts say. 

“While the crypto market has been marching to a more optimistic drummer of late, we can’t assume it won’t be affected by a stock market sell-off or a sudden shift in rates expectations,” Noelle Acheson, author of Crypto is Macro Now and former head of market insights at Genesis, said in a note Wednesday. 

“It does have unique drivers, which will lend support; but many crypto investors breathe the same air as traditional asset investors, and it feels like it’s getting a bit thin.”


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the On the Margin newsletter.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Salt Lake City, UT

MON - TUES, OCT. 7 - 8, 2024

Blockworks and Bankless in collaboration with buidlbox are excited to announce the second installment of the Permissionless Hackathon – taking place October 7-8 in Salt Lake City, Utah. We’ve partnered with buidlbox to bring together the brightest minds in crypto for […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

AERODROME TEMPLATE.png

Research

Aerodrome is a "MetaDEX" that combines elements of various DEX primitives such as Uniswap V2 and V3, Curve, Convex, and Votium. Since its launch on Base, it has become the largest protocol by TVL with more than $495M in value locked, doubling Uniswap's Base deployment.

article-image

And a look into the newest name on the Trump ticket: Sen. JD Vance

article-image

Plus, Imran Khan’s intriguing experiment on the speeds of crypto onramps

article-image

The SEC has signaled a timeline to issuers that could lead to a July 23 launch for the ETH funds, people close to the process told Blockworks

article-image

PayPal has unequivocally made a name for itself as a crypto adopter among fintech giants

article-image

Also, a look into how the highly-debated SAB 121 could end up shaking out for crypto custodians

article-image

Vance, an Ohio Republican, is largely seen as crypto-friendly