GM. This is Milk Road, the newsletter that makes you sound like the guy with a Bloomberg terminal (minus the $24k/y subscription).
Here’s what we’ve got for you today:
- ✍️ Stocks hit, crypto resilient.
- 🎙️ The Milk Road Show: Ethereum's Next Upgrade Could be The Most Bullish One Ever.
- 🍪 Hyperliquid flips Binance in BTC perps liquidity.
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Prices as of 2:00 p.m. ET. Powered by CoinGecko.
STOCKS HIT, CRYPTO RESILIENT 💪
Yesterday, the Fed raised interest rates by 25 bps, its first hike in more than three years.
The 12-member FOMC voted unanimously (12-0) in favor of the hike.
The same committee, back in July, came down 9-3, with all three dissenters calling for a 25 bps hike, while the majority voted to keep the rates unchanged.
The trigger behind yesterday’s hike was rising inflation, led by energy.
Since the August lows, Brent crude oil has rallied 36.7% and is trading ~$105 on the back of the Iran conflict. As a result, August CPI came in at ~3.4%.
The real surprise from yesterday wasn’t so much the rate hike (the market was already pricing in a ~90% chance of a hike), but the projections.
Each quarter, the Fed publishes its dot plot - a document in which 18 officials mark where they think rates should be each year. In June, the consensus put rates down to 3.4% by 2028 and 3.1% in the long run.
Yesterday’s version moved every single number on the plot higher.
The Fed’s own Summary of Economic Projections revised the 2026 target rate, up from 3.8% to 4.1%, and 2027 from 3.6% to 4.1%, with zero net cuts next year.
By the Fed’s own numbers, the first real cuts don’t land until 2028.
Meanwhile, President Trump spent the afternoon demanding rates go down to “1% or lower,” calling American credit the best in the world. 👇
Amidst all of this, stocks took a hit, while crypto remained resilient.
… though the bigger story lies in the oil chart.
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STOCKS HIT, CRYPTO RESILIENT 💪 (P2)
Comparing the moves of the top 3 crypto blue chips with those of stocks tells us that crypto is more resilient to rate hikes right now.
End-of-day market closes from Sep 15 to Sep 16:
I.e. The hike landed on equities while crypto went the other way.
That said, it’s not like crypto had a fun week. Spot Bitcoin ETFs saw ~$746M leave across the two sessions leading up to the Fed decision, and CLARITY died in the Senate.
With this latest hike, the Fed is trying to use a demand tool on a shipping lane it doesn’t control.
The Strait of Hormuz used to move about a fifth of the world’s oil. The Iran conflict brought that traffic to a grinding halt in late February.
Brent crude oil opened the year at ~$60 and printed a high of ~$120 around the end of April.
On Sep 10, drones out of Iraq’s Maysan province hit pumping stations 8 and 9 along the Saudi East-West pipeline to Yanbu, acting as a bypass to the choked Straight.
Brent closed yesterday at $105.83, and energy prices are up ~16% Y/Y. The chokepoint first showed up at the pump, then in the Brent numbers, and now at the FOMC.
The U.S. Energy Information Administration forecasts Brent to stay ~$90 for the remainder of 2026 and to drop to around $77 by mid-2027.
If Brent follows this trajectory, the next CPI print will cool off, and a December hike will be harder to justify.
If it stays above ~$110, Warsh could be persuaded to hike again.
The FOMC meets next in October.
Until then, all eyes are on Brent.
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Hyperliquid flips Binance in BTC perp liquidity.
U.S. Spot Ethereum ETFs have absorbed 30x more ETH than the network issued this month.
Crypto Options Platform Derive hits an ATH Notional Options Volume of ~$1.9B in August.
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