Market expectations for a Federal Reserve rate cut have plummeted to zero, marking a dramatic shift in monetary policy sentiment. Persistent inflation data has forced traders to abandon hopes for easing, with some now debating if the next move could actually be a rate hike. This hawkish pivot comes amid growing concerns over stagflation, a scenario characterized by stagnant growth and high inflation. While traditional risk assets like the SPY face pressure from higher-for-longer rates, the US Dollar Index (DXY) has found renewed support. Interestingly, Bitcoin is increasingly being positioned as a strategic hedge against long-term inflationary pressures and economic uncertainty. The decoupling of rate expectations highlights a critical turning point for global financial markets and central bank credibility.
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