💵 Fed Rate Cuts Coming 🤫 But When?

Good Morning!

As we inch closer to Election Day, the markets are putting on quite a show. Gold's sprinting to all-time highs, while the 10-year Treasury yields are climbing to three-month peaks – classic signs of pre-election market anxiety. Recent robust U.S. labor data has traders second-guessing Fed rate cuts, pushing Treasury yields ahead of their European counterparts. Goldman's betting this spread will widen further, targeting a 205-basis-point gap between German and U.S. bonds. Both frontrunners Harris and Trump are expected to keep the spending taps flowing, adding another layer of complexity to the market's calculations.

In today’s email:

• FedWatch: Fed officials agree on rate cuts but clash on timing

• Bitcoin: Back to $67k, not broken higher just yet

• Treasury Yields: Why are they surging?

• Gold: Keeps hitting a new ATH everyday 🚀 

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THE BIG IDEA

Fed officials agree on rate cuts but clash on timing, showcasing a delicate balance between maintaining economic momentum and controlling inflation

The Fed's latest episode of "How Fast Should We Cut?" features an interesting plot twist. Four top officials are all nodding yes to rate cuts, but they're squabbling over the tempo like jazz musicians who can't agree on the beat. Kansas City's Jeffrey Schmid and Dallas's Lorie Logan are playing it safe, advocating for a "gradual" descent to avoid market whiplash. They're reading the room – strong retail numbers and surprisingly robust job growth in September have some wondering if we might need to pump the brakes on those cuts.

But here's where it gets spicy: San Francisco's Mary Daly is singing a different tune. She's eyeing those current rates like they're last season's fashion – too tight for comfort. With inflation cooling down and productivity potentially picking up the slack, she's suggesting we shouldn't let a strong economy stop us from trimming those rates further.

Markets are pricing a 87% chance of landing in the 4.5%-4.75% range come November

Minneapolis's Neel Kashkari is trying to thread the needle, calling for "modest" cuts over several quarters. But he's keeping his options open – if the job market starts looking shaky, he's ready to pick up the pace faster than a day trader's heartbeat.

The Fed's next big huddle is set for November 6-7, and until then, we're in for their traditional pre-meeting quiet period. They've already dished out their first rate cut in four years (a surprisingly chunky half-point to 4.75%-5%), but the real drama is just beginning.

With economic signals mixing like a DJ's playlist, the Fed's balancing act between maintaining growth and keeping inflation in check is shaping up to be this fall's hottest financial thriller.

MARKETS AT A GLANCE

TOP NEWS

European dependency on Russian LNG deepens despite political tensions, as Moscow's market share jumps from 14% to 20% amid shifting global energy dynamics

Europe's attempting to wean itself off Russian energy, but the plot thickens. Russian LNG imports have surged to 20% of EU's total, up from 14% last year, while the U.S. maintains its dominant 45% position. Qatar's share dipped to 12%, partly due to Red Sea shipping disruptions. Despite sanctions talks and political handwringing, Europe's Russian energy habit proves harder to kick than expected.

Treasury yields surge as strong US data and Trump's polling gains overshadow ECB's dovish stance, while markets reassess central bank trajectories

US Treasury yields are flexing their muscles, with the 10-year breaking higher on robust economic signals and Trump's climbing poll numbers. Meanwhile, ECB's endpoint gets a reality check, creeping back toward 2%. Markets are particularly focused on next week's core PCE data and the upcoming US payrolls report, though they're keeping their powder dry until the US elections.

Oil prices retreat from Monday's gains as markets digest Middle East tensions and global supply dynamics

Crude's taking a breather after Monday's rally, with Brent hovering near $74 and WTI around $70. Markets are on edge, waiting to see Israel's next move after Iran's missile show. Meanwhile, Brent's shrinking prompt spread hints at loosening supply conditions, while Cushing's crude stockpiles keep climbing. Plus, China's stimulus efforts add another wild card.

CRYPTO

Bitcoin's network strength reaches unprecedented levels as major public miners flex their computational muscle, now controlling nearly 30% of total hashrate

The Bitcoin network just flexed past 700 EH/s – its highest hashrate ever – showing a remarkable 13% surge since April's halving. Public mining giants like CleanSpark and MARA are dominating the space, now commanding 28.9% of total hashrate. Mining profitability's also perked up, hitting $50/PH/s as BTC touched $68,000 and transaction fees spiked, though a 4% difficulty bump looms ahead.

Bitcoin community reacts strongly to Michael Saylor's surprising pivot from self-custody advocate to institutional custody supporter

MicroStrategy's Saylor is catching heat for suggesting Bitcoiners should trust "too big to fail" banks over self-custody – a dramatic reversal from his post-FTX stance. While some defend his institutional focus, critics like Simon Dixon suggest ulterior motives tied to MicroStrategy's potential banking ambitions. The debate highlights crypto's ongoing tension between institutional adoption and core decentralization principles.

Former MakerDAO, now Sky, contemplates brand identity reversal amid community pushback and token adoption challenges

Just two months after MakerDAO's rebrand to Sky, the protocol's hitting turbulence. Despite USDS hitting 1B in supply, founder Rune Christensen admits the multi-token system's causing confusion. Now they're floating three options: stick with Sky, return to Maker, or create a hybrid identity. Community vote's set for early November.

Solana's meme token platform Pump.fun unveils advanced trading terminal and teases token launch amid explosive growth

After generating $140M in fees and 2.5M token launches, Pump.fun's upping its game with a new pro trading terminal featuring zero fees for the first month. Co-founder Sapijiju hints at a "lucrative" token airdrop while the platform celebrates hitting $1.1B in volume and 31.6K daily token creations.

GOLD

Gold's rally defies traditional market drivers, with a mystery buyer possibly influencing prices amid low reported demand

Gold’s price surge, up 34% this year, defies usual correlations and lacks clear explanations. Despite producing 2,850 metric tonnes since March, only half is accounted for. Speculative derivatives, Chinese buying, or even BRICS-led de-dollarization could be influencing this opaque market. Traditional buyers remain cautious, yet the rally persists, hinting at significant, unseen forces at play.

DAILY ECONOMIC CALENDAR (ET)

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