Connors expects Warsh to leave a rate hike on the table. The Fed’s preferred inflation report, the Personal Consumption Expenditures Price Index, or PCE, released earlier this week, reached 3.7% in July, pushed higher in part by energy prices following the war in Iran.
While traders have raised their bets on a September hike following the report, Connors thinks they’re getting ahead of themselves.
“There will be no hike before midterms,” he said.
For bitcoin, the outlook for the September meeting may not be the most important part of Warsh’s speech anyway.
“The link is there, but it’s indirect,” Hashdex chief investment officer Samir Kerbage said.
“Bitcoin doesn’t respond to the September decision. It responds to global liquidity and to where the long end of the curve settles, the same channel that drives gold.”
The Treasury said last week it would increase purchases of long-dated government debt after the 30-year Treasury yield hit a 19-year high. The announcement helped cool the bond sell-off and fueled bitcoin’s move higher. Kerbage called the rally “mostly a liquidity event.”
This year’s Jackson Hole conference could also be important for crypto traders as the theme centers on financial innovation, payments and policy, putting stablecoins, tokenized deposits and faster settlement systems squarely in the conversation.
