Following last week’s update, expectations for further monetary easing continue to strengthen. We now anticipate 25 basis points of cuts in October and an additional 50 basis points in December. The latest CPI print of 0.3% month-on-month, below the 0.4% consensus, suggests that tariffs are having only a modest inflationary effect.
However, the ongoing U.S. government shutdown has effectively frozen most macroeconomic data releases, leaving investors to rely heavily on this single inflation reading. The absence of employment data — a crucial gauge for policymakers — adds further uncertainty.
In Washington, progress remains elusive. The Senate once again failed to pass a continuing resolution to fund the government through November 21, with the vote tally at 50 in favour, 43 against, and seven abstentions. The partisan deadlock persists: Republicans insist on reopening the government before addressing policy issues, while Democrats demand that any resolution preserve Affordable Care Act subsidies.
As the shutdown enters its fourth week, disruptions across federal operations are growing. The longer the impasse drags on, the greater the likelihood that employment figures will disappoint once data releases resume.
Amid political and macro uncertainty, digital assets have shown resilience. The combination of a looming policy pivot and weakening economic momentum is offering structural support to the asset class. Bitcoin has risen steadily since the October 17th low near US$104K, signalling improving sentiment.
Fund flows mirror this cautious optimism:
Overall, investors remain selective but engaged, favouring Bitcoin as a relative safe haven while trimming exposure to Ethereum.
The strengthening case for rate cuts, coupled with fiscal paralysis in Washington, is reshaping market expectations and asset allocation. With data scarcity amplifying noise around each inflation release, digital assets may benefit from growing demand for non-traditional hedges.
Early signs of stabilization in Bitcoin flows and leveraged positioning suggest that confidence could be returning — potentially marking a turning point in post-liquidation sentiment across the crypto landscape.
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