The Kobeissi Letter
9 hour ago
Bearish

Markets price 53% chance of Fed rate hike on September 16

1 min

The August jobs report exceeded forecasts by a wide margin, shifting market odds toward a Federal Reserve rate hike at the September 16 meeting. Rate hike probability rose to 53% based on futures pricing. Stronger labor data increases the likelihood of tighter monetary policy to contain inflation, which typically pressures risk assets, including cryptocurrencies, through higher discount rates and stronger dollar dynamics.

Key facts

  • August jobs report: came in nearly triple expectations, signaling stronger labor demand.
  • Market pricing: probability of a September Fed rate hike at 53%.
  • Mechanism: stronger jobs data raises inflation persistence risk, prompting tighter policy.

Implications for crypto and risk assets

  • Higher rates: increase funding costs, reduce liquidity, and elevate hurdle rates for speculative assets.
  • Dollar strength: potential USD appreciation can weigh on crypto valuations.
  • Volatility: rate path uncertainty may widen crypto price ranges ahead of the meeting.