'Forget a pivot' — markets won't see Fed rate cut boost in 2023, says analyst
Bitcoin (BTC) and other bulls will not benefit from a major change in United States inflation policy in 2023, one analyst says.
In a Twitter thread on Dec. 20, Jim Bianco, head of institutional research firm Bianco Research, said that the Federal Reserve would not “pivot” on rate hikes next year.
In light of the surprise yield curve control (YCC) tweak by the Bank of Japan (BoJ), analysts have become all the more bearish on the prospects for risk assets this week.
As Cointelegraph reported, the move spelled immediate pain for the U.S. dollar, and with the Wall Street open in sight, equities futures were trending down in step at the time of writing.
For Bianco, the fact that the BoJ was now seeking to follow the Fed in tightening policy to ward off inflation meant that the latter was unlikely to loosen its own policy.
“Again, if JAPAN! is NOW hiking to changing policy NOW because of inflation, remind me why the Fed would be pivoting anytime in 2023?” part of one post read.
The real tangible consequences of Japan’s decision may only be felt later, Bianco continued. With bond yields rising, Japan should attract capital back home and away from the U.S.
“The dollar is getting crushed against the Yen (or the Yen is soaring versus the dollar). Japan is getting a yield again. That should drive funds back into Japan,” he wrote.
A return to lowering interest rates is a key eventuality being priced in by markets beyond crypto, and this is something that simply no longer pays, Binanco said. Despite BTC/USD already down nearly 80% in just over a year in tandem with the Fed’s quantitative tightening (QT), the pain may thus still be far from over.
“Powell is hawkish,” he concluded, referring to last week’s speech by Fed Chair, Jerome Powell,
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