Citadel bets on a Fed rate hike Wednesday as bitcoin analysts call a hold. Someone will be wrong.
Citadel’s macro team says Wednesday’s hike isn’t about the data. It’s about Warsh’s best shot at making a surprise actually count before the market stops being surprised.
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Summary
- Citadel is calling for a surprise 25-basis-point Federal Reserve rate hike on Wednesday, against broad market expectations that rates will be left unchanged.
- A shock move to lift the benchmark rate to 3.75% to 4% could push Treasury yields higher and pressure risk assets, including bitcoin, which has already pulled back from recent highs.
- Citadel argues that hiking now would end the Fed’s era of heavy forward guidance, reassert its independence and reset market and wage-setting behavior more effectively than a widely anticipated move in September.
