Clarity in the Bill, Fog in the Macro

Bitcoin has yet to regain momentum as higher bond yields and expectations of an extended period of elevated policy rates lift the relative appeal of dollar-denominated assets. Spot Bitcoin ETFs recorded net outflows of $480 million last week, which we read as a rotation driven by opportunity cost rather than a change in the underlying investment case. The vehicles that absorbed capital so efficiently during the accumulation phase transmit portfolio rebalancing with the same efficiency, and periods of net redemption are a normal feature of an asset class now held through regulated wrappers.

The Federal Reserve meets on Wednesday, with a 25-basis-point increase now priced at roughly 86% to 90% and broadly accepted across the market. Our reading is that the decision is being shaped as much by market expectations as by fresh inflation evidence. Core CPI has fallen to a five-year low of 2.4%, and wage growth has moderated to 3.1% year over year, which offers little sign of a wage-price spiral. The case for tightening rests instead on composition: services inflation remains firm, with super core services up 0.5% on the month and 3% year over year, and the resulting trajectory would place the annualized pace of core PCE near 3.4%, well above the 2% target that guides policy. Both readings are defensible, and the more useful conclusion for allocators is that the policy path from here is data-dependent rather than predetermined.