Hot inflation, rising oil, and a jump in October hike odds kept rates and Bitcoin under pressure, while long-end bonds started weakening in a way framed as a solvency/currency-debasement warning. The macro read tied CPI, 6.3% PPI vs 5.3% consensus, and a still-tight labor backdrop to a market that may be swapping inflation risk for recession risk. Bitcoin stayed near 80K, but the bigger call was that BTC still owns the dominant debasement narrative even if dominance rises and altcoin inflows stay weak. The oil path, the October 28 Fed decision, and whether yields top in October were the main near-term swing factors.
CPI came in "a little elevated" at 37, and PPI printed 6.3% vs 5.3% consensus, reinforcing the view that inflation "just won’t go away."
Inflation risk was framed as potentially being traded for recession risk, with oil and a hotter-than-expected inflation print both feeding that shift.
Long-end bonds went down on a hot inflation report for the first time in a long time, which was tied to longer-term solvency fears, continued currency debasement, and "more economic pain" ahead.
There are "genuine" questions about the safety of government bonds, including US Treasuries, so long-end yields can still go higher even after a dip.
Fed pricing shifted ahead of the October 28 meeting: a hike expectation moved from 70/30 to 50/50, with the level changing again after the new data; Fed Watch still showed 70/30 as the baseline display.
Jobless claims were described as pretty much in line, retail sales as up, while the Empire State manufacturing survey jumped from 7.6 last time to 25.5 vs 10.3 expected, from a survey of about 1,000 companies.
Michelle Bowman in Thailand, Christo Wall on Monday, and Beth Hammock on Tuesday were described as not exceptionally hawkish, with messaging that current rates are in line with what the Fed wants.
After the hot 10-year move, the market shifted from 5.32 to 5.06 on the 10-year, from 5.6 to 5.4 on the 20-year, and the 30-year was described as going "all the way down" after the same move.
Equity risk premium was defined as S&P 500 earnings minus the 10-year Treasury yield, and it was said to be falling because bond yields are rising and bond prices are going down.
The yield-curve setup was framed as recessionary: 10-year minus 3-month inversions preceded 1991, 2000, 2007, and 2020, with recession timing described as lagging by about 24 months and the un-inversion dated to November 2022 / 2024-2025.
Non-farm payrolls were described as pretty much flat, real income transfers and real consumer spending as flat, industrial production as a little up, and household employment as going down.
Anthropic IPO was described as coming next month unless market conditions deteriorate; OpenAI IPO was described as coming next year.
BTC was back around 80K, with the rally said to have made little sense given the macro backdrop, ETF flows not great over the last week or so, and higher hike odds from CPI/PPI hurting BTC.
BTC dominance was described as around 60% and likely to rise further in the short term, while altcoin inflows were expected to stay limited because they are too risky right now.
Oil rose for six straight days, roughly $1 a day from 89 to 96, and the move was tied to ceasefire headlines reversing, China still being the biggest oil importer, refining bottlenecks, and winter demand keeping oil elevated.
If inflation turns back toward 2%-3%, BTC benefits; if it turns a lot higher, BTC runs into trouble, while the debasement trade and rising debt keep BTC’s mainstream narrative intact.