Fed Economic Outlook

Find out our latest reports, listed below:

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• Bybit x Block Scholes Quarterly Report: What will drive crypto in Q3 2025?‍
• Bybit x Block Scholes July Volatility Review‍
• ‍Bybit x Block Scholes Quarterly Report: Altcoin season and the evolving role of Bitcoin

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Daily Updates:

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• Fed Chair Powell spoke yesterday in Rhode Island, almost one week after the FOMC cut rates by 25bps to 4.00–4.25%. His remarks offered a wide-ranging reflection on the economy, policy challenges, and lessons from recent crises, while underlining the Fed’s dual mandate.
• On the outlook, Powell said that

“recent data show that the pace of economic growth has moderated,”

• Contextualizing Powell’s remarks, GDP rose ~1.5% in the first half, down from 2.5% last year. Consumer spending has softened, and businesses remain cautious. The labor market is showing clear signs of cooling: unemployment edged up to 4.3% in August, with payrolls slowing to just 29k/month over the summer.

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• Powell acknowledged that

“downside risks to employment have risen,” though broader measures of labor demand remain steady.

• PCE inflation rose 2.7% YoY in August (core 2.9%), up from 2.3% and 2.5% a year earlier, with tariffs driving much of the goods price increase. Services disinflation, including housing, continues to provide some offset. Powell cautioned that tariff effects will “likely be spread over several quarters” but emphasized the Fed will “make sure that this one-time increase in prices does not become an ongoing inflation problem.”
• On policy, Powell described last week’s cut as

“another step toward a more neutral policy stance,” noting the current setting remains “still modestly restrictive.”

• He underscored the balance of risks:

“If we ease too aggressively, we could leave the inflation job unfinished… If we maintain restrictive policy too long, the labor market could soften unnecessarily.”

• Importantly, he reiterated that policy is “not on a preset course” and will remain data-dependent.

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• Recent economic indicators provide context for this approach.
• Preliminary data from S&P Global show the US Manufacturing PMI eased to 52 in September, down from August’s 53, marking the first moderation after a 39-month high. The sector continued to expand, though at a noticeably softer pace, with output growth slowing for the fourth consecutive month.
• New orders rose for the ninth straight month, but gains were marginal, constrained in part by higher export losses linked to tariffs. Manufacturing employment edged lower, while input inventories increased more slowly. Lead times extended to the greatest degree in four months, reflecting ongoing supply chain pressures.
• Input prices remained elevated, among the highest since the pandemic, although slightly lower than August’s.

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• In contrast to the US, where manufacturing continued to expand, preliminary S&P Global data show the UK Manufacturing PMI fell to 46.2 in September, down from 47.0 in August and below market expectations of 47.1.
• The reading signalled the steepest contraction in the sector since April, with output declining at the fastest pace since March.

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• Crypto spot prices have been moving largely sideways since the leg lower earlier this week.
• Alongside it, sentiment in derivatives markets has been sliding lower as volatility smiles push further towards OTM puts, and outright volatility expectations stay relatively high for short-dated tenors.
• This indicates that the market positioning remains tense after the Monday-morning drop without much change since.

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• Tether is reportedly in discussions with investors to raise up to $20B at an estimated $500B valuation, according to Bloomberg sources on Tuesday. If completed, this would position the stablecoin issuer among the most valuable private companies globally, alongside firms such as OpenAI and SpaceX. The potential transaction is said to involve new equity rather than sales by existing shareholders, with Cantor Fitzgerald advising on the deal.
• Currently, Tether operates the world’s largest stablecoin, USDT, with a supply of $172B. The company recently announced plans to launch a USD-pegged stablecoin for the U.S. market, although the head of Tether’s U.S. unit, Bo Hines, emphasized that the firm “has no plans to raise money.” Bloomberg sources suggest the target raise of $15–20B could ultimately be lower.

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• UK-listed B HODL Plc has acquired its first 100 BTC, paying approximately $11.3M at an average price of $113,227 per coin. This purchase marks the launch of the company’s bitcoin treasury strategy and immediately positions B HODL among the top 100 public bitcoin treasury companies, currently ranked 98th globally.
• The firm emphasized that it remains “focused on the disciplined acquisition of bitcoin to build a long-term strategic reserve that also powers B HODL's Lightning Network operations.”

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• ReserveOne, a newly formed digital asset management firm, announced in a Tuesday press release that it has confidentially submitted a draft Form S-4 filing with the U.S. Securities and Exchange Commission as part of its proposed merger with M3-Brigade Acquisition V Corp, a blank-check company. The transaction is intended to facilitate a Nasdaq listing and raise over $1B.
• The firm plans to implement a “diversified digital asset treasury strategy,” holding a basket of cryptocurrencies anchored by Bitcoin and including Ethereum, Solana, and other digital assets, with potential yield generation through institutional staking and lending. ReserveOne aims to offer investors exposure to cryptocurrencies via a publicly traded stock, rather than traditional wallets or exchanges.

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This Week’s Calendar:

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Charts of the Day:

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