Daily News 19

Tag: Federal Reserve policy

  • Bitcoin Bull Run Revives as Price Jumps 8%

    Bitcoin Bull Run Revives as Price Jumps 8%

    Key Highlights

    • Bitcoin rallies 8.10% from Wednesday’s low of $75,064, reclaiming the 365-day moving average at $80,701 for the first time since November 2025.
    • Long-term holder supply hits a record accumulation phase since February while short-term holder supply declines, signaling strengthening conviction among strong hands.
    • Despite technical resilience, analysts warn of subdued trading activity versus prior bull markets and potential headwinds from upcoming rate hikes and a rising U.S. Dollar Index.

    Bitcoin’s Technical Breakthrough Above Yearly Moving Average

    Bitcoin ($BTC) has staged a significant recovery, surging 8.10% from Wednesday’s low of $75,064 to trade back above its 365-day moving average, currently situated at $80,701. This marks the first time since November 2025 that the asset has sustained positioning above this critical long-term trend indicator. The bounce follows a pullback from the $82,000 level earlier in September, a decline the market appears to have attributed to the Federal Reserve’s decision to raise interest rates by 25 basis points. The speed of the recovery suggests the prior dip represented a pricing-in of hawkish monetary policy expectations rather than a fundamental shift in demand.

    Macro Headwinds Fail to Derail Recovery

    The ascent occurs against a backdrop of considerable macroeconomic adversity. The CLARITY Act failed to pass in the Senate, liquidity conditions are tightening due to persistent inflation, and a series of rate hikes is projected for 2027. Compounding the pressure, the Bank of Japan has also moved to raise interest rates. According to crypto researcher Bull Theory on X, this resilience—absorbing multiple bearish catalysts while pushing higher—is “reminiscent of the 2023 market bottom.” The ability to reclaim the yearly moving average amid such conditions is being interpreted by bulls as a major victory, signaling underlying structural strength rather than speculative froth.

    On-Chain Data Reveals Shifting Holder Dynamics

    Supporting the bullish technical structure, on-chain analytics from CryptoQuant reveal a profound shift in investor behavior. Since February, the total supply held by long-term holders (LTHs) has trended steadily higher, while the supply held by short-term holders (STHs)—defined as coins with an age of 155 days or under—has been in consistent decline. Crypto analyst Funding Vest noted on CryptoQuant, “It was a record phase of accumulation.” This dynamic indicates that weak hands are being shaken out of the market while higher-conviction participants accumulate aggressively. Analysts suggest this supply constriction could act as a catalyst for a supply shock if prices continue to appreciate.

    Analyst Perspectives: Bullish Parallels and Cautionary Signals

    However, the picture is not uniformly optimistic. Analyst Joao Wedson highlighted on X that trading activity remains subdued compared to previous bull market peaks, potentially evidencing weaker retail participation. Wedson cautioned, “Right now, Bitcoin is still in the process of breaking its bearish trend. It might not even have fully transitioned into a bull run.” The looming prospect of further rate hikes and a strengthening U.S. Dollar Index (DXY) presents tangible risks for risk-on assets, suggesting the path forward may be volatile despite the current technical victory.

    Why This Matters

    The reconquest of the 365-day moving average is a widely watched milestone that often signals a transition from bearish to bullish market structure. The convergence of this technical signal with a historic accumulation trend among long-term holders suggests the current rally is backed by fundamental conviction rather than leverage-driven speculation. However, the macroeconomic overhang—specifically the trajectory of global interest rates and dollar strength—remains the primary variable. If central banks maintain a hawkish stance, the liquidity required to sustain a full-blown bull run may be constrained, potentially trapping the market in a prolonged consolidation or “chop” phase. The divergence between smart money accumulation and retail apathy is a classic late-bear/early-bull signature that warrants close monitoring of volume metrics in the coming weeks.

    Frequently Asked Questions

    Has Bitcoin confirmed a new bull market?

    Not definitively. While reclaiming the 365-day moving average is a necessary condition for a bull market, analysts like Joao Wedson caution that Bitcoin is still “in the process of breaking its bearish trend” and may not have fully transitioned. Sustained volume expansion and higher highs are required for confirmation.

    What does the long-term holder accumulation trend indicate?

    Data from CryptoQuant shows a record accumulation phase since February, with LTH supply rising and STH supply falling. This signals that experienced, high-conviction investors are absorbing supply from weaker participants, a dynamic that historically precedes supply-constrained price appreciation.

    What are the main risks to Bitcoin’s current rally?

    The primary risks are macroeconomic: a projected series of Federal Reserve rate hikes in 2027, ongoing quantitative tightening, Bank of Japan policy normalization, and a rising U.S. Dollar Index. Additionally, subdued retail trading volume suggests the rally lacks broad-based participation, making it vulnerable to sudden sentiment shifts.

  • Kaiko Data Reveals Bitcoin Volatility

    Kaiko Data Reveals Bitcoin Volatility

    Bitcoin Volatility Surges Amid Federal Reserve Policy Uncertainty

    Bitcoin’s recent volatility has surged, reflecting renewed uncertainty surrounding Federal Reserve policy decisions. According to data from KaikoData, the 30-day rolling volatility for Bitcoin spiked following the August Jackson Hole speech, eased temporarily, and then climbed again into September. This pattern suggests traders should closely monitor future Fed communications for clearer guidance on interest rates, which directly impacts market sentiment across digital asset markets.

    Mixed Signals Across Crypto Markets

    The broader cryptocurrency market indicates mixed signals, with various assets experiencing different momentum shifts. As Bitcoin grapples with climbing volatility, reduced forward guidance from the Federal Reserve adds an element of unpredictability. This uncertainty is particularly relevant for traders engaged in the derivatives market, where open interest and funding rates serve as crucial indicators of market sentiment. The potential for liquidation cascades also rises as traders navigate this volatile landscape.

    Key Data Points

    • Bitcoin’s 30-day rolling volatility spiked after the August Jackson Hole speech
    • Volatility eased before climbing again into September
    • Reduced Fed forward guidance leaves markets uncertain about interest rate trajectory
    • Traders are advised to watch for clearer Fed signals moving forward

    Market Conditions and Trading Activity

    Bitcoin’s price remains relatively unchanged as volatility increases, with no significant trading volume reported in the past 24 hours. The current market environment showcases hesitancy among traders as they respond to the Federal Reserve’s policy indications. This volatility trend may lead to increased caution in the market as traders reassess their positions amid the shifting landscape.

    As the leading cryptocurrency, Bitcoin’s price volatility and market influence make it particularly sensitive to macroeconomic policy shifts. The Federal Reserve’s policy decisions significantly affect financial markets, including cryptocurrencies, given their impact on interest rates and overall economic conditions.

    Levels to Watch

    Traders are monitoring potential shifts in Bitcoin’s volatility based on upcoming Fed announcements. Key levels to watch will be the reactions to new guidance, which could either stabilize or exacerbate current volatility trends. Risks remain high, especially if traders encounter sudden market movements that could lead to significant liquidations.

    This article is for informational purposes only and does not constitute financial advice.

  • Morgan Stanley Files for Rare Eaton Vance State Municipal Bond ETF

    Morgan Stanley Files for Rare Eaton Vance State Municipal Bond ETF

    Morgan Stanley Files for Eaton Vance State Municipal Bond ETFs in Rare Market Move

    Morgan Stanley has filed for a new series of exchange-traded funds focused on Eaton Vance state municipal bonds, a rare filing that signals growing institutional appetite for specialized municipal investment vehicles. The move comes as market participants show increased interest in tax-exempt income strategies amid evolving fixed-income dynamics.

    Filing Details and Market Context

    The investment banking giant’s registration statement covers ETFs that would wrap Eaton Vance’s existing state-specific municipal bond strategies, which are currently available only as closed-end funds or mutual funds. This structural shift could unlock broader access for retail and advisory platforms that prefer the ETF wrapper for its intraday liquidity, transparency, and potential tax efficiency.

    Bloomberg Intelligence ETF analyst Eric Balchunas noted the development could attract significant investor attention, particularly if the funds launch with competitive fee structures at or below institutional share-class pricing.

    Strategic Implications for Municipal Market

    The filing represents a notable pivot by a major wirehouse into the state-muni ETF arena, a segment historically dominated by niche providers. If approved, the funds would join a small but growing lineup of single-state municipal bond ETFs, offering investors in high-tax states such as California, New York, and New Jersey a more accessible vehicle for localized tax-exempt income.

    Industry observers suggest the move reflects broader demand for granular fixed-income building blocks as advisors construct customized ladder strategies amid uncertainty around Federal Reserve policy and state fiscal trajectories.

    Fee Structure and Competitive Landscape

    Pricing will be a critical determinant of adoption. Eaton Vance’s current mutual fund share classes carry expense ratios that vary by state and share class; an ETF priced at institutional levels — typically 20 to 35 basis points for muni strategies — could pressure existing closed-end funds trading at premiums or discounts to net asset value.

    Competitors including VanEck, iShares, and Invesco already offer broad national muni ETFs, but single-state ETF options remain limited. Morgan Stanley’s entry could accelerate product innovation in the category.

    Regulatory Path and Timeline

    The registration statement is subject to SEC review, a process that typically spans several months. Launch timing will depend on regulatory feedback and market conditions. Morgan Stanley’s jurisdiction over a wide array of investment products, including ETFs regulated by financial authorities, positions the firm to navigate the approval process efficiently.

    Key Factors for Investors to Monitor

    • Expense ratios: Final fee disclosures will dictate cost competitiveness versus existing mutual fund and closed-end fund alternatives.
    • State coverage: The initial lineup’s geographic scope will determine addressable market size.
    • Trading volume and spreads: Early liquidity metrics will signal institutional and retail adoption.
    • Tax-law developments: Federal and state policy changes affecting municipal bond tax exemption could influence demand.

    As the ETF marketplace continues to fragment into increasingly specialized exposures, Morgan Stanley’s filing underscores a broader industry trend: major manufacturers are moving beyond core beta products into targeted fixed-income niches to capture fee revenue and deepen advisor relationships.

  • Bitcoin Holds Steady as US Strikes on Iran Rattle Stocks and Send Oil Prices Higher

    Bitcoin Holds Steady as US Strikes on Iran Rattle Stocks and Send Oil Prices Higher

    Bitcoin remained above $78,000 on Monday despite fresh U.S. strikes on Iran, higher oil prices and losses across major stock indexes. The cryptocurrency traded near $78,623, down 0.7% over 24 hours, after falling to an intraday low of about $77,162, according to CoinGecko.

    Despite the daily decline, Bitcoin is on track to finish August more than 24% higher. That would make it the cryptocurrency’s strongest monthly performance since 2017.

    Bitcoin holds steady as geopolitical risks rise

    The weekend saw the first exchange of U.S.-Iran strikes since late July, renewing concerns about shipping through the Strait of Hormuz and driving crude oil prices higher.

    West Texas Intermediate futures rose 2.6% to approximately $85.60 a barrel. U.S. equities moved lower, with the S&P 500 down 0.5% at around 7,673 and the Nasdaq Composite falling 0.4% to about 26,289.

    Iliya Kalchev, an analyst at Nexo Dispatch, said Bitcoin’s resilience was more significant than its August gain. Kalchev noted that a hawkish Federal Reserve and an active geopolitical escalation rarely affect risk assets in the same week, making Bitcoin’s ability to hold its ground against both pressures a notable signal.

    Kalchev also pointed to derivatives data indicating that traders may be repositioning rather than adding significant new capital. Twenty-four-hour trading volume more than doubled to $183 billion, while open interest remained broadly unchanged.

    Fed policy weighs on crypto markets

    Bitcoin also faced pressure from Fed Chair Kevin Warsh’s hawkish address at Jackson Hole. Expectations for a September rate hike climbed to approximately 58%, compared with about 35% before his remarks.

    Gold also declined, slipping to nearly $4,440 as the stronger interest-rate outlook outweighed its typical safe-haven appeal.

    Bitcoin’s August rally lost momentum late last week following Warsh’s comments. Spot Bitcoin ETFs ended a nine-day streak of inflows, while Ethereum funds continued to attract investor money.

    Ethereum traded near $2,448 on Monday, registering a modest decline while remaining on course for an August gain approaching 30%.

    Market attention now shifts to Friday’s U.S. jobs report and the August consumer price index reading scheduled for September 11.

  • S&P 500 Beats Inflation Again as 30% Earnings Growth Drives Real Returns

    S&P 500 Beats Inflation Again as 30% Earnings Growth Drives Real Returns

    The S&P 500 is on track to deliver another positive inflation-adjusted return in 2026, but the market’s gains are increasingly reliant on corporate profits holding up in a more challenging interest-rate environment.

    The benchmark index has climbed approximately 12%–13% year to date through late August, comfortably outpacing recent U.S. inflation readings. The Consumer Price Index rose about 3.4% over the 12 months through July, while the Federal Reserve’s preferred personal consumption expenditures measure increased 3.7%. As a result, stock investors have achieved a substantial positive real return after accounting for higher consumer prices.

    Corporate Earnings Are Driving More of the S&P 500 Rally

    The key question for the 2026 stock-market rally is what is supporting it.

    S&P 500 companies delivered exceptionally strong second-quarter results. FactSet reported that earnings growth reached its highest level since the second quarter of 2021, while Reuters estimated year-over-year second-quarter growth at approximately 33.5%.

    FactSet also found that 86% of companies reporting through Aug. 7 exceeded earnings-per-share estimates. That compares with five-year and 10-year averages of 78% and 76%, respectively.

    Analysts currently expect third-quarter earnings to grow by roughly 27%–28% year over year, with full-year profit growth projected at approximately 30%.

    Those results give the equity rally a stronger fundamental foundation than a market advance driven solely by expanding valuation multiples.

    Artificial intelligence remains a central part of the market’s growth story. Technology and communication-services companies have generated some of the strongest profit gains, while continued investment in AI infrastructure is supporting earnings expectations.

    AI-related stocks have repeatedly helped lift the latest rally. Nvidia and other semiconductor companies helped push the S&P 500 toward record territory in August.

    Inflation Still Matters as Stocks Rise

    A positive nominal stock-market return does not necessarily translate into the same increase in purchasing power.

    If the S&P 500 gains 13% while inflation reaches 3.5%, the simplified real return is approximately:

    13% − 3.5% = 9.5%.

    The precise inflation-adjusted calculation is slightly different because returns compound, but the subtraction offers a useful approximation.

    Comparing stock-market performance with inflation also helps place record index levels in context. Investors care not only whether the S&P 500 rises, but whether those gains increase purchasing power faster than consumer prices.

    Coinpaper’s guide to real yields explains the same concept from the bond-market perspective: inflation determines how much of a nominal investment return remains in real terms.

    Higher Treasury Yields Pose a Growing Risk

    The main challenge is that persistent inflation is keeping borrowing costs elevated.

    The 30-year Treasury yield recently traded above 5.2%, near its highest level since 2007, while the 10-year yield has remained around 4.7%. Higher Treasury yields increase the returns investors can earn from relatively low-risk government debt and raise the discount rate applied to future corporate profits.

    That pressure has already affected equities. The S&P 500 reached a record 7,798.99 on Aug. 13 before a bond selloff pushed stocks lower. The reversal was especially painful for highly valued technology and semiconductor shares.

    Federal Reserve policy represents another risk. Markets sharply increased expectations for a September rate hike after Chair Kevin Warsh reiterated that inflation remained too high. Renewed pressure on oil prices has added another potential catalyst for inflation.

    For investors, the outlook is more nuanced than the headline “stocks beat inflation.”

    The S&P 500 is still generating a strong real return in 2026, and exceptional earnings growth is providing significant support. However, sustaining that advantage will increasingly depend on corporate profits growing quickly enough to offset persistent inflation, higher bond yields and tighter financial conditions.

    Source: cryptonews.net

  • Bitcoin Holds Above $78K as U.S.–Iran Clash Pushes Oil Prices Higher

    Bitcoin Holds Above $78K as U.S.–Iran Clash Pushes Oil Prices Higher

    Bitcoin traded near $77,900 on Aug. 31 as renewed fighting between the United States and Iran pushed oil prices higher and pressured global equity markets. The cryptocurrency remained relatively stable despite sharp moves across energy, bond and stock markets after U.S. strikes on Iran’s Larak Island.

    Bitcoin holds near $78,000 as oil prices climb

    Bitcoin was down approximately 0.4% over 24 hours after trading between $77,162 and $79,343. The limited move contrasted with a stronger reaction in other markets following the strikes.

    An unnamed U.S. official confirmed that American forces targeted two Iranian rocket launchers. According to Reuters, the official claimed Iran’s Islamic Revolutionary Guard Corps was preparing rockets carrying sea mines for deployment in the Strait of Hormuz.

    Iran said the attack killed and wounded soldiers and civilians. The Revolutionary Guards promised a “response and punishment,” but did not immediately provide casualty figures or details of further action.

    Brent crude climbed approximately 2.7% to $90.51 per barrel during Monday’s Asian session. West Texas Intermediate traded near $85.23 after gaining more than 2%.

    The oil price increases reflected renewed concern about shipping through the Strait of Hormuz, a key route for global oil and liquefied natural gas movements. Military activity near the waterway can therefore affect energy prices and inflation expectations.

    Asian equities declined, while Nasdaq 100 futures fell between 0.5% and 0.7% across early market readings. Gold also failed to attract sustained safe-haven demand, falling approximately 0.8% to around $4,418 per ounce in the cited market snapshot.

    Bitcoin remained close to $78,000. Its stability does not prove that $BTC has permanently become a geopolitical hedge, but it shows that the latest escalation did not trigger the immediate cryptocurrency sell-off seen during some earlier risk events.

    Bitcoin’s daily chart also pointed to short-term strength. $BTC traded near $78,084, comfortably above the Bollinger Bands’ $72,471 midpoint but below the $86,255 upper band. The bands widened after the latest rally, indicating higher volatility.

    The relative strength index stood at 69.91, just below overbought territory, after recently crossing 70. The reading reflects strong momentum but also leaves Bitcoin vulnerable to consolidation. Daily volume of about 4,200 $BTC remained below the initial breakout spike, suggesting buyers may need stronger participation to challenge $80,000.

    Bitcoin ($BTC) price chart, source: crypto.news

    Bitcoin also held above $62,000 during July’s U.S.–Iran strikes, even as oil, bonds and Asian stocks recorded larger moves.

    Bitcoin outperformed gold and Nasdaq in August

    Bitcoin gained approximately 23% during August, compared with reported advances of 9% for gold and 4% for the Nasdaq. The cryptocurrency was therefore the strongest performer among the three assets over the month.

    The broader crypto market showed less resilience on Monday. XRP declined approximately 0.8%, while Solana lost around 0.6%. Ether traded near $1,625 as traders reduced exposure to several major altcoins.

    Part of Bitcoin’s monthly performance followed renewed institutional demand through U.S. spot exchange-traded funds. The products accumulated approximately $2.8 billion across eight consecutive inflow sessions during the recovery from Bitcoin’s August lows.

    The streak ended on Friday. U.S. spot Bitcoin ETFs recorded an estimated $201.9 million in net outflows on Aug. 28, according to Farside. The reversal indicates that ETF demand should not be characterized as uninterrupted.

    Bitcoin’s rally from approximately $63,500 had previously been supported by eight consecutive ETF inflow sessions, although declining futures exposure indicated that leverage was not the only source of demand.

    Federal Reserve policy adds uncertainty to Bitcoin’s outlook

    The geopolitical escalation followed Federal Reserve Chair Kevin Warsh’s restrictive policy message at the Jackson Hole symposium on Aug. 28.

    Warsh said inflation remained too high, while labor markets were stable and economic output was solid. According to his published remarks, he said most Federal Open Market Committee members preferred to await more information before deciding whether another policy change was appropriate.

    Markets interpreted the speech as increasing the possibility of another interest-rate rise. Fed funds futures placed the probability of a September increase near 57% to 60%, up from approximately 35% before the address. The estimate represents market pricing rather than a Federal Reserve commitment.

    Higher oil prices could further complicate the outlook. Sustained energy price increases can raise transportation and production costs, making it more difficult for inflation to return toward the Federal Reserve’s 2% objective.

    Sept. 4 jobs report is the next major Bitcoin catalyst

    The next major U.S. market catalyst is the August employment report, scheduled for Sept. 4 at 8:30 a.m. ET, according to the Bureau of Labor Statistics calendar.

    Strong employment data could reinforce expectations for tighter monetary policy. A weaker report could reduce rate-hike forecasts, although the market response would also depend on wage growth and unemployment.

    Bitcoin’s immediate technical range remains between support around $77,000 and resistance extending from approximately $79,400 to $80,800. These levels are market observations rather than guaranteed reversal points.

    The durability of Bitcoin’s relative strength will depend on whether it remains stable if oil prices continue rising, equity losses deepen or interest-rate expectations move higher. ETF flows and the Sept. 4 labor report will provide the next evidence.

  • Renowned Economist Harshly Criticizes the Fed’s Latest Policies: “They’re on the Wrong Track”

    Renowned Economist Harshly Criticizes the Fed’s Latest Policies: “They’re on the Wrong Track”

    Economist James E. Thorne has criticized the Federal Reserve’s restrictive monetary policy, arguing that higher interest rates may not address the underlying causes of current inflationary pressures.

    Thorne said Fed Chairman Kevin Warsh and Wall Street circles appear to view supply-driven inflation as a conventional overheating problem caused by excessive demand. However, he argued that elevated inflation is not solely the result of strong consumer spending. Energy costs, housing shortages, production cuts, and other supply constraints are also contributing to price pressures.

    He warned that additional rate increases could weaken the economy’s productive capacity rather than reduce inflation.

    Employment Data Challenges the “Overheating” Thesis

    Thorne pointed to declining quarterly full-time employment data as evidence that the economy may be undergoing a structural transformation rather than experiencing a temporary, one-month statistical anomaly. He said the fact that a significant share of the decline came from public-sector employment did not reduce its importance.

    In Thorne’s view, the data suggests that the economy is not necessarily overheating. Instead, the labor market may be adjusting to changes in fiscal policy, industrial structure, and institutional conditions.

    He said the housing market was sending a similar signal. As one of the sectors most sensitive to interest rates, housing is directly feeling the effects of tight monetary policy, Thorne argued, rather than driving inflation.

    Thorne also said recent US economic growth could be attributed less to broad, credit-fueled overheating and more to the early effects of the Trump administration’s supply-side economic policies, along with a long-term investment cycle.

    He highlighted rising investment in artificial intelligence, data centers and computing capacity, electricity generation, and infrastructure. These investments, he said, could expand the economy’s production capacity and improve efficiency.

    According to Thorne, further Federal Reserve rate increases could make it harder to finance productive investment, ultimately limiting the expansion of future supply capacity while doing little to resolve supply-related inflation.

    “Customs Duties Are Not the Same Thing as Persistent Inflation”

    Thorne further argued that, under classical economic theory, the effects of genuine supply shocks should diminish over time as prices and production adjust.

    He noted that an oil-price shock does not necessarily require permanently high interest rates. Tariffs can also produce a one-time increase in the price level, he said, but that is different from a self-reinforcing and continuous inflationary process.

    Thorne also said there is no strong evidence that the neutral real interest rate, a measure considered important for economic stability, or “r*” has increased by approximately 100 basis points over a short period.

    For the Federal Reserve, he said, the central question is whether further monetary tightening is appropriate while full-time employment is declining and the housing sector remains under pressure.

    Thorne concluded that, under current conditions, new rate increases could represent less of “prudent inflation control” and more of a deliberate suppression of demand caused by supply constraints and the mistaken belief that an economy undergoing structural change is overheating.

    This is not investment advice.

  • Kevin Warsh’s Jackson Hole Speech Prompts Markets to Reassess Fed Rate Outlook

    Kevin Warsh’s Jackson Hole Speech Prompts Markets to Reassess Fed Rate Outlook

    Federal Reserve Chair Kevin Warsh used his first Jackson Hole speech to outline his approach to monetary policy, inflation control, economic conditions, financial markets and the growing role of artificial intelligence in the economy.

    Markets reacted quickly, with investors adjusting expectations for the Federal Reserve’s next policy decisions. Treasury yields moved higher as traders increased bets that the central bank could keep interest rates elevated or consider additional increases if inflation fails to improve further.

    🇺🇸 Kevin Warsh just delivered his first ever Jackson Hole speech as Fed Chair, and the tone was hawkish1. Inflation data doesn’t show meaningful improvement, 2% target remains firm and fixed2. Fed has more work to do unless underlying inflation moves toward target with speed…
    — Bull Theory (@BullTheoryio) August 28, 2026

    The post from Bull Theory on X described Warsh’s speech as hawkish and highlighted his comments on inflation, economic activity, artificial intelligence investment and monetary policy. The discussion reflected market attention on Warsh’s first major public address as Fed chair.

    Warsh’s message centered on the need for clearer evidence that inflation is moving steadily toward the Federal Reserve’s 2% goal before policymakers change direction.

    Inflation Remains the Federal Reserve’s Main Focus

    Warsh said recent inflation data has not improved enough for the Federal Reserve to become comfortable with current price trends. He reiterated that the central bank’s 2% inflation target remains unchanged.

    The Fed chair said policymakers must continue monitoring underlying inflation measures. He added that more work would be necessary if inflation does not move toward the target at a faster pace.

    Investors viewed the remarks as a signal that the Federal Reserve is not ready to shift toward easier monetary policy. Market participants had been watching Jackson Hole for indications that the Fed might become more supportive of interest-rate cuts.

    Instead, Warsh maintained a firm position on inflation control. His comments increased attention on upcoming economic releases, including inflation reports and employment data.

    Short-term Treasury markets reflected the change in expectations. The two-year Treasury yield, which is particularly sensitive to expectations for Federal Reserve policy, moved higher after the speech.

    Strong US Economy Gives the Fed More Policy Space

    Warsh also discussed the condition of the US economy. He said consumer spending remained healthy and business investment continued to expand.

    The Fed chair pointed to strong economic activity as evidence that higher interest rates have not caused a major slowdown. He also noted that unemployment remains low.

    Warsh said business investment had increased at a strong pace, with spending on artificial intelligence infrastructure contributing to recent growth. He said companies are investing heavily in new technology, although the timing of productivity gains remains uncertain.

    The comments gave investors another factor to consider when assessing future monetary policy. Strong economic activity could allow the Federal Reserve to maintain tighter financial conditions for longer if inflation remains above target.

    Markets had been watching whether economic weakness would force the central bank to consider faster rate cuts. Warsh’s remarks provided a different signal by emphasizing continued economic strength.

    Treasury Yields Rise as Markets Reprice Interest Rates

    The initial market response centered on interest-rate expectations. Treasury yields rose after Warsh indicated that additional measures may be needed if inflation does not improve.

    The increase in short-term yields showed that traders were changing their expectations for upcoming Federal Reserve meetings and factoring in a greater risk of tighter policy.

    The US dollar also attracted attention after the speech as markets assessed the prospect of higher interest rates. A stronger interest-rate outlook can increase demand for dollar-denominated assets.

    Equity markets were mixed as investors evaluated the effect of higher borrowing costs on companies. Technology stocks remained in focus because of their role in artificial intelligence investment and their future earnings outlook.

    Warsh did not provide specific guidance on the next rate decision. Instead, he indicated that future action would depend on economic data.

    The approach marked a shift away from detailed forward guidance. Warsh has previously supported a Federal Reserve that communicates less about future decisions and places greater emphasis on incoming economic information.

    Artificial Intelligence Investment Enters the Fed’s Policy Discussion

    Artificial intelligence was another major topic in Warsh’s Jackson Hole address. The Fed chair discussed how AI investment could influence productivity and economic growth.

    Warsh said companies are spending heavily on AI-related infrastructure. However, he questioned how quickly those investments would translate into broader productivity gains.

    The discussion showed that the Federal Reserve is monitoring technology trends as part of its economic assessment. AI development could affect employment, business investment and future growth rates.

    The comments gave financial markets another theme to consider alongside inflation and interest rates. As the Fed maintains a cautious policy stance, investors are watching whether AI investment can help increase corporate profits and productivity.

    Warsh’s priorities became clearer in his first Jackson Hole speech: keeping inflation on a steady path, relying on economic data and avoiding hasty decisions on monetary policy.

    Traders turned to rate futures and the Treasury market’s higher yields to assess short-term expectations and monitor the Federal Reserve’s next moves.

    Upcoming inflation and employment data, along with comments from other Fed officials, will shape the market’s next response.

  • Bitcoin and Gold Plunge as Kevin Warsh Signals Tighter Federal Reserve Policy

    Bitcoin and Gold Plunge as Kevin Warsh Signals Tighter Federal Reserve Policy

    Investors turned cautious on August 28 as the U.S. dollar strengthened and markets assessed more hawkish comments from Federal Reserve Chair Kevin Warsh during his first speech as Fed chair at Jackson Hole, Wyoming.

    Bitcoin dropped below $79,000, while gold and silver also suffered steep losses. The sell-off reportedly erased approximately $670 billion in market value in just seven minutes.

    The common factor was a stronger dollar and rising expectations that the Federal Reserve may need to keep interest rates high to bring inflation under control.

    Warsh Signals That Further Tightening Remains Possible

    Warsh suggested that the Fed’s fight against inflation may not be over, saying that financial conditions don’t seem restrictive enough right now. Although he did not promise an immediate rate hike, the Fed chair made clear that additional monetary tightening remains on the table.

    That outlook is changing investor positioning, particularly for assets that tend to perform well when money is inexpensive and interest rates are low.

    What the Sell-Off Means for Bitcoin and Gold

    Warsh’s remarks and the broader market sell-off have added uncertainty for investors. The key question is whether Bitcoin’s and gold’s recent gains reflected genuine, long-term market shifts or were driven largely by expectations that monetary policy would become increasingly supportive.

    Investors are now watching the dollar, Treasury yields and interest-rate expectations for further signals. A stronger dollar could make conditions more difficult for both Bitcoin and gold by reducing their appeal.

    If the dollar continues to rise and yields remain elevated, Bitcoin may face further pressure. However, if markets interpret Warsh’s comments as a warning rather than a signal of aggressive rate hikes, the latest decline could prove to be another sharp market swing rather than the start of a prolonged downturn.

    Warsh’s speech was not the only factor behind the decline. Markets were already highly sensitive, with investors preparing for a significant signal on the future direction of monetary policy.

    For now, Bitcoin’s decline and gold’s underperformance suggest that investor sentiment has shifted away from hedging against currency devaluation and toward assessing how many additional interest-rate hikes markets may still need to price in.

    Source: cryptonews.net

  • Mortgage Rate Predictions Through 2030: Economic Factors at Play

    Mortgage Rate Predictions Through 2030: Economic Factors at Play

    Mortgage rates have remained elevated in recent years, but where could they go over the next five years? And should homebuyers or homeowners wait for a significant decline before purchasing or refinancing?

    Mortgage rates are influenced by several economic factors, including 10-year U.S. Treasury yields, inflation, Federal Reserve policy and demand for mortgage-backed securities. These indicators can offer clues about the future direction of mortgage rates.

    Mortgage rates typically follow the government bond market

    One of the most useful indicators for forecasting mortgage rates is the yield on the 10-year U.S. Treasury note. Mortgage rates and 10-year Treasury yields generally move in the same direction, although mortgage rates are typically higher because lenders account for additional risks.

    The difference between the Treasury yield and the mortgage rate is known as the spread. That spread must be considered when estimating future 30-year fixed mortgage rates.

    To develop a five-year forecast, economists’ projections can be combined with data compiled using artificial intelligence.

    Economists’ five-year forecast for Treasury yields

    Michael Wolf, a global economist at Deloitte Touche Tohmatsu Ltd., outlined the firm’s expectations for Treasury yields over the next five years in a December update from the Deloitte Global Economics Research Center.

    “We assume the Fed leaves rates unchanged until December 2026. The average federal funds rate reaches its neutral 3.125% in the middle of 2027,” he wrote. Wolf said the 10-year Treasury yield will ease gradually through the second quarter of 2027, “to settle at 3.9% from the third quarter of 2027 through the end of 2030.”

    Other forecasts point to somewhat higher long-term yields. Goldman Sachs analysts, for example, expect the 10-year Treasury yield to rise over the long term to 4.5% by 2035.

    The Congressional Budget Office projects that the 10-year Treasury yield will reach 4.1% by the end of 2026, then rise gradually to about 4.3% by 2030.

    Anthropic’s Claude artificial intelligence system compiled these projections into a consensus forecast used for the mortgage rate estimates below.

    Read more: Why mortgage rates increased after the Federal Reserve rate cut

    Estimating the mortgage rate spread

    The 10-year Treasury yield and the 30-year fixed mortgage rate are separated by a spread. In recent years, that difference has generally been on either side of 2.5 percentage points. That is considerably higher than the spread between 2010 and 2020, when it was below two percentage points and often near 1.5 percentage points.

    Using a 2-percentage-point spread, the relationship can be illustrated as follows:

    • 10-year Treasury rate = 4%
    • Spread = 2 percentage points
    • Mortgage rate = 6%

    As a recent example, the 10-year Treasury yield was 4.09% and the 30-year fixed mortgage rate was 6.00% on March 5. The spread was 6.00 – 4.09 = 1.91 percentage points.

    The spread was below two percentage points, which is one reason mortgage rates had declined.

    Claude AI suggested using a variable spread that gradually narrows:

    “The spread between 30-year fixed mortgage rates and the 10-year Treasury is driven by prepayment risk, credit risk, and supply/demand for mortgage-backed securities (MBS). The Federal Reserve’s quantitative tightening (QT) program widened spreads after 2022 as private markets absorbed more MBS. Spreads have begun normalizing in late 2025 and are expected to continue tightening.”

    Five-year mortgage rate forecast

    Using the Treasury yield projections and Claude’s suggested base-case spread between the bond market and 30-year fixed mortgage rates, a five-year mortgage rate forecast can be developed.

    Five-Year Mortgage Rate Forecast

    Read more: See today’s best mortgage rates.

    Bull and bear cases for mortgage rates

    The base case assumes gradual spread normalization, easing inflation and modest Federal Reserve policy changes. Claude AI also prepared more optimistic “bull” and pessimistic “bear” scenarios.

    Bull case: A soft economic landing

    “The Fed successfully guides inflation back to 2% without a hard recession. Gradual FOMC rate cuts through 2027 pull the 10-year yield to 3.3% as the term premium compresses. The MBS spread normalizes toward its long-run average of 170 bps as QT ends and private MBS demand recovers. Result: a 30-year fixed rate near 5.00% by 2030.”

    Bear case: Persistent inflation and fiscal pressure

    “Inflation remains sticky above 2.5% and mounting U.S. fiscal deficits push the term premium higher, keeping the 10-year yield near 4.4 to 4.6%. The spread widens to 240 bps as market volatility and MBS supply weigh on secondary markets. Mortgage rates climb toward 7.00% by 2027 before easing slightly to 6.60% by 2030.”

    How accurate are five-year mortgage rate forecasts?

    These are long-range estimates based on historical patterns and broad economic expectations. The projections could change substantially if any of the following occurs:

    • 10-year Treasury yields significantly outperform or underperform the forecast. Yields could fall sharply during a severe economic setback, such as a recession, or rise because of mounting government deficits. Geopolitical unrest and other unexpected events could also cause major volatility.
    • The spread between Treasury yields and mortgage rates narrows or widens dramatically.
    • Federal Reserve monetary policy changes substantially.

    Mortgage rate predictions for the next five years: FAQs

    Will mortgage interest rates ever return to 3%?

    No current forecast predicts a 3% mortgage rate within the next five years. However, it would have been difficult to anticipate the exceptionally low home loan rates that followed the Great Recession and the global pandemic. Events of that magnitude are difficult to forecast, but they can push mortgage rates sharply lower.

    What will mortgage rates be in 2027?

    The analysis above predicts that mortgage rates will be near 6% in 2027.

    Will mortgage rates drop in the next five years?

    Based on the estimates above, mortgage rates are not expected to fall significantly over the next five years. A recession or another unexpected economic disruption, such as war, a financial collapse or another pandemic, could alter that outlook.

    Is it better to fix a mortgage rate for two or five years?

    Borrowers considering an adjustable-rate mortgage with an initial fixed-rate period should first consider how long they expect to remain in the home. They can then evaluate the long-term mortgage rate outlook. In many cases, the best option is the initial fixed-rate term that best fits the borrower’s current budget.

    Read more: 8 strategies for getting the lowest mortgage rate possible