Following the late-July 2026 FOMC meeting, bond traders were convinced the Fed would hike rates in September, with market pricing implying two hikes by year-end. We disagreed as it seemed too high a bar for four of the nine remaining Fed voters who preferred holding rates steady in July to suddenly flip to a hike, especially with inflation unlikely to climb materially over the following six weeks and growth already having slowed notably since the start of the year.

The more important point, though, was seasonality: the labor market has historically shown weakness over the summer, which drove the rate cuts in both September 2024 and September 2025. With the FIFA World Cup now behind us, a similar bout of labor-market softness could force bond traders to reassess once again.

That's why we saw gold (here), and potentially Bitcoin, as the key beneficiary once traders caught on. With gold rallying, the question is whether Bitcoin is still tethered to the same macro forces, and with software stocks rallying, whether it's still tethered to the same micro forces. How does this week's inflation report fit into that picture?

Bitcoin (LHS) vs. SP500 SPY ETF (RHS) - correlation breakdown forever?