Disclaimer: This is not financial or investment advice. You are responsible for any capital-related decisions you make, and only you are accountable for the results.

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Yesterday's Fed Meeting:

Let's highlight a few of the main highlights from yesterday's Fed Meeting before we dive into the details of it.

• The Fed cut by 25bps as the market expected and was priced for.
• There were two dissents, one from Miran for 50bps, and one from Schmid for no cut.
• Announced the end of quantitative tightening (QT) for December 1st.
• Powell pushed back on the December cut: "far from a foregone conclusion".

Powell and the Fed delivered the widely expected 25bps cut at yesterday's October Meeting, although there wasn't an outright consensus for the cut, as we saw two dissents. One from Miran, who wanted a 50bps cut, and one from Schmid, who voted for no cut.

Alongside this, the Fed announced that quantitative tightening would come to an end by December 1st, and Powell mentioned that the Fed would be able to add to their balance sheet in the future, if they deemed it necessary. This is positive for risk assets going into next year.

Most of the above was expected and therefore priced by the market going into the rate decision, hence there was a muted market reaction in response to these elements. What really moved the market was when Powell threw a December cut into doubt, "a cut in December is far from a foregone conclusion". Before Powell spoke, markets priced a December cut at a 94% likelihood, however, following Powell's comments, the odds dropped to 70% for a December cut.

Target Rate Probabilities for Dec 10th Meeting:

There's clearly dissent amongst the committee, and this is likely to continue, especially when there's such a lack of clarity around the data, or lack of data, due to the government shutdown.

One theory we're open to is that Powell is providing a pushback to cutting rates in December to put pressure on Trump in the negotiations to get the government reopened again, and he can use the lack of data as an excuse to “slow down” (the rate cuts). Powell is a Democrat, and the Democrats need some negotiating power (in the negotiations to reopen the government), and Powell opting not to cut rates might be that negotiating leverage that the Democrats need.

Should we see a deal done that enables the government to reopen, then we'd be looking for the tone out of the Fed to become more dovish again. If so, this would confirm our above thesis.

Earnings Out Of Big Tech:

Yesterday, Meta, Google and Microsoft all reported Earnings, which came in strong with beats on revenues. However, all the companies are guided towards increased capital expenditure into AI, which, as a result, threatens margins going forward. Alongside this, the forward guidance/outlook wasn't as rosy as the market would have hoped.

This resulted in $META pulling back by 8%, and $MSFT down 3%. However, $GOOGL moved up by 5%. Overall, this was a mixed set of results, and the market will be looking for better future guidance going forward.

Markets will now turn to Apple and Amazon reporting today.

Market's Reaction:

The notable moves following yesterday's events were that the S&P and Nasdaq were mostly unchanged, but the Russell pulled back, whilst the US2Y Yield moved up 12bps. This is the market pricing in a reduced likelihood of an interest rate cut at the December 10th Fed Meeting.

US2Y Yield up 12bps yesterday:

BTC fell below the $112,600 a few hours before the Meeting, with price then wicking into the $108k's as Powell delivered more hawkish remarks than the market expected.

BTC 1D Timeframe:

Cryptonary's Take:

Undoubtedly, the takeaway from yesterday is that Powell was more hawkish than we, and many market participants expected. Powell's commentary threw a December cut into doubt, although it still remains as a 70.4% chance that the Fed cuts in December.

Following Powell's comments yesterday, this might result in a reduced willingness amongst participants to take increased risk over the coming 1-2 weeks as we wait for the US government to reopen and begin receiving the economic data. Therefore, it's likely that Majors are still in chop mode, and we're open to the idea that BTC revisits the lower bound of the range - this is between $101k-$104k - with price even potentially deviating into the late $90k's.

Over the medium term, not much has changed. We're still in a rate-cutting cycle; it may just be that the pace of rate cuts is slowed, which in our view isn't an issue. Remember, in 6 months, Powell is going to be replaced, and likely replaced with a very dovish candidate, as this is what Trump wants.

Therefore, should Majors revisit the lower end of their range, we'd be buyers at those price levels.

Those areas look like:

• BTC: $98k-$104k
• ETH: $3,400-$3,600
• SOL: $165-$180
• HYPE: $39-$42
• AURA: $0.07 (solid holder base now, would be surprised to see it go back below $0.06).

Cryptonary, OUT