CME pricing now shows a ~73% chance of a 25bps cut in September, with the odds of 50bps nearly erased after PPI. Powell today will likely set the tone into the weekend, but the September jobs report remains the real decider in our view.
One thing to also watch: the September 9th BLS preliminary benchmark payroll revision. Combined with signs of labor market softening, this could radically reshape the Fed’s reaction function just days before the September FOMC. As a reminder of how quickly the narrative can flip when the data shifts, last year’s revision showed 818,000 fewer jobs added, which came just ahead of the Fed’s 50 bps cut in September.
For now, markets remain skittish. Equities and crypto are off their highs and flows show risk being trimmed heading into Powell’s speech today. Structurally, the combination of global liquidity and fiscal dominance continues to support markets – positioning this as consolidation rather than breakdown once event risk is behind us.
Crypto: Flows Flip, Conviction Tested
Crypto has yet to recover last week’s post-PPI losses. BTC dipped to lows of 112,000 and ETH slipped below 4,100 with both still stuck in consolidation. Positioning remains cautious, but the underlying structure is unchanged.
- Flows – In sharp contrast to last week’s strong inflows, this week saw consistent outflows: BTC ETFs -USD 1.1 billion, ETH ETFs -USD 600 million. Only yesterday did ETH flip positive +USD 288 million after four straight days of outflows. The message: conviction is there, but skittishness rules into Jackson Hole. The key question now is whether inflows resume once this week’s wobble passes.
- Rotation – BTC dominance sits around 59.3%, holding steady after weeks of decline. ETH volumes still lead BTC, with corporate flows driving activity, but the momentum has paused. Alts have shown pockets of strength, but the beta rotation is waiting for clearer signals for the time being.
The takeaway: this is not capitulation, just digestion. Once flows stabilize, the ETH 5,000 target remains the focal point, with BTC well supported by institutional demand even if range-bound for now.
Looking Ahead: Powell, Payrolls, and the Liquidity Tide
The near-term catalyst is Powell’s speech today – markets are braced for cautious language, not fireworks. The true test lies in the data over the coming weeks:
- Friday, 5 September 2025 – Nonfarm Payrolls
- Tuesday, 9 September 2025 – BLS preliminary payroll revision
- Thursday, 11 September 2025 – CPI
- Wednesday, 17 September 2025– FOMC rate decision
These releases will shape whether the Fed leans on inflation risks or bows to growing labor market weakness. This week’s pullback looks like consolidation, not breakdown. If anything, these dips are reminders of where the true supports lie: liquidity, fiscal dominance, and institutional demand. In that context, the coming weeks are less about Jackson Hole theatre and more about whether the data allows the bull market to reassert itself.
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