Benjamin Cowen breaks down Kevin Worsh's debut as Fed chair and why rising yields remain a real headwind for crypto.
Key Points
Key Highlights:
- The Fed is moving away from forward guidance, the new statement was half the length of Powell's last one and just sticks to plain facts
- Nine committee members are projecting a rate hike before year end, and markets are pricing in only a 15% chance the Fed has not hiked by December
- The 2 year yield is climbing again, and history shows once it moves up persistently the Fed eventually has no choice but to follow with a hike
- Inflation has not dropped below 2% since 2021, and crypto has underperformed all year simply because the market is pricing in tighter policy ahead
Takeaway A new Fed chair often gets tested early, and a correction in the second half of this midterm year would be the perfect test of Worsh's resolve. Rising yields point one direction, and it is not the direction crypto wants.
