Fed Governor Waller signals September rate decision hinges on August CPI; BTC rallied on dovish remarks, liquidating $415M in shorts, but futures still price 60% odds of a hike.
Macro & Markets ·
Fed Governor Christopher Waller stated that continued disinflation could support holding rates steady at the September meeting, while hotter inflation data could push him toward a rate increase. His remarks triggered an immediate rally in Bitcoin and altcoins including XRP, Ethereum, and BNB, with the cryptocurrency briefly reclaiming $80,000. The market move forced short sellers to liquidate approximately $415 million in positions over 24 hours as rising prices squeezed their bets.
The rally reflected a sharp pullback in near-term rate-hike expectations. CME FedWatch pricing showed September hike odds fell to roughly 50% from 63% a day earlier following Waller's comments, a significant shift that extended to broader asset markets including stocks. Treasury yields also declined as traders repositioned for a potential rate pause rather than a hike.
Yet the optimism remains conditional and contested. Despite the dovish rhetoric and initial market reaction, futures markets still price a material probability of a September hike. The outcome hinges on next week's August CPI print—a hotter-than-expected reading could reverse the rally and restore hawkish pressure, leaving crypto gains vulnerable to reversal.