Macro Data Points to a Soft Landing

The global deleveraging event last week was driven by weakening economic expectations and rising fears of a potential policy error by the Federal Reserve. At the height of this uncertainty, the market priced in a 50 bps cut for September, as recession risks took center stage.

However, in just a few days, the narrative has shifted. The market is now leaning back towards a soft-landing scenario rather than one driven by recession fears. Recent economic data has supported this pivot, showing signs of disinflation without signaling an imminent downturn:

• ISM Services PMI: 51.4 vs. 51 forecast
• PPI: 0.1% vs. 0.2% forecast
• Core CPI: 0.17% vs 0.19% forecast
• Retail Sales: 1% vs. 0.3% forecast

As a result, fed funds futures have recalibrated, reducing expectations for cuts from 50 bps to 25 bps.

This suggests that while the Fed is still expected to ease policy, it can afford to do so more gradually. The economy remains stable, inflation is easing, and the urgency for aggressive cuts has lessened.

This is good news for the crypto market. A soft landing implies looser monetary conditions, which in turn expand liquidity and support speculative investments. As we move toward this softer outcome, we believe the conditions are ripe for crypto to t...