The rate-cutting cycle is over, the rate-hiking cycle is already starting abroad, and a U.S. hike is framed as plausible this year rather than a cut. The setup rests on mixed labor data, inflation that is not fully defeated, and yields that are already grinding higher, with the 10-year back to 4.7 and the 30-year still pushing up. Base case is not a recession call but a 10% to 20% stock correction starting around September or late Q3/early Q4, after which BTC is expected to find a cycle bottom. The broader message is that a rate hike is not the end of the world; it usually means the economy is still okay, and late-Q3/early-Q4 weakness could be another chance to buy through the cycle.
Last Fed rate cut was in 2025, and the U.S. rate-cutting cycle is now over.
A rate hike by the Fed is framed as a real possibility this year, with a token 25 bp move and September or December as the main candidates; October is less likely because of the midterms at the end of the month.
U.S. employment level fell 23,000 in the latest print but is still up 316,000 over the last year, about +0.2% YoY, after plateauing for a while.
Last nonfarm payroll print was weak, but initial claims are still relatively low and had recently hit the lowest level in decades.
U.S. unemployment peaked at 4.5% in November 2025 and has since fallen to 4.1%, helped by labor force participation dropping quickly since November.
Layoffs have trended up since 2021 but remain roughly at pre-pandemic levels, while job openings have fallen since 2022 and are basically normalized to pre-pandemic levels.
The job-openings-per-unemployed-worker ratio fell into December 2025, briefly went below 1, then bounced back to just below pre-pandemic levels and is now back above 1.
Headline inflation has been falling since the scary May 2026 print, helped by oil moving back down into July, but recent oil strength raises the risk of a CPI lag reacceleration.
If the Fed does not raise rates, the long end of the yield curve is expected to move sharply higher; the 30-year yield hit about 5.5% in October 2023 and is still heading higher, while the 10-year is back up to 4.7 and is expected to reach about 5%.
Rising yields are being read as the market pricing more inflation reacceleration risk than recession risk; in a recession, yields would likely be dropping.
Kevin Warsh is described as certain inflation gets back to 2%, but without forward guidance or rate-hike discussion that would make that path credible.
Central banks abroad have already restarted hikes: the euro area a few months ago, Australia earlier this year, Japan for a while and likely more to come, and New Zealand already; the UK and China have not yet raised.
The 1990s precedent is used to argue a hike is not the end of the world: the Fed raised, cut, raised again in 1997, held, cut, and then the recession finally hit later.
Base case is a 10% to 20% stock-market correction starting likely in September or late Q3/early Q4, not a base-case recession; that drop is also expected to help BTC find its market-cycle bottom.
The first Investing Through the Cycles conference is in November, with the main day on November 21, a possible event the night before, checkout on the 22nd, and ticket prices rising on September 1.