BitMEX co-founder Arthur Hayes has recently stirred up the crypto market with his bold predictions about an interest rate cut by the U.S. Fed ahead. In an X post on April 7, Hayes spotlighted vital dynamics that the market needs to witness for a dovish stance by the central banking authority. “If ur trying to predict when the Fed caves and goes Brrr, watch the bond vol MOVE Index,” the co-founder stated.
Arthur Hayes Correlates Fed Rate Cuts With MOVE Index, What’s Happening?
The BitMEX co-founder nabbed substantial market attention with his finance lingo, signaling that a Fed rate cut looms as markets take heat in the wake of Donald Trump’s reciprocal tariffs commencement. Notably, Arthur Hayes draws attention to the MOVE Index, a tool that tracks volatility in U.S. Treasury markets.
“As it goes higher anyone doing financed treasury or corp bond trades will be forced to sell by higher margin reqs,” he added while pointing towards the index. For context, high spikes in this index signal more stress and uncertainty in bond trading. Therefore, as volatility rises, traders and institutions may have to force sell, bringing further downside risk to prices.
“These are the two markets the Fed will defend to death,” Hayes added, pointing towards the Treasury and corporate bond markets. If either of the two takes a severe blow, rate cuts are possible as the Federal Reserve will pivot. Further, the rising odds of a U.S. recession amid Trump’s tariffs saga also add to speculations of a rate cut shortly ahead.
Here’s The MOVE Index Level To Watch
Primarily, a MOVE Index above 140 is a breaking point where the central banking authority will step in to relieve stress in markets. The MOVE index is currently at 125.71. In short, Arthur Hayes believes that a spike above 140 could spark force mass selling in Treasuries & corporate bonds. This massive selling and downside pressure could prompt a Fed rate cut soon.
Arthur Hayes On Trump’s Tariff Impact
Simultaneously, the co-founder also spotlighted recent political and market dynamics that came into play post-reciprocal tariffs kick-off. Replying to Pershing Square CEO Bill Ackman, Hayes called on Trump’s supporters and how much skin they had in the financial landscape. “A large % of Trump’s base don’t own lots of financial assets,” the co-founder stated.
“I think schadenfreude amongst those who don’t own stonks vs. those who do, is quite strong and hence Trump can go to the mat with these tariffs.” With this comment, the BitMEX lead conveyed that Trump’s core voter base does not have much stakes in stocks, bonds, or other major investments. In turn, there’s a sense of satisfaction among non-investors (who often feel left out or hurt by the financial system) when the market takes a hit and others are impacted. Hence, the Republican can easily push through with these tariffs and trade wars as his base doesn’t care much about Wall Street expectations and the S&P 500, Arthur Hayes added.
On the other hand, traders and investors have witnessed a black Monday as this week kicked off. Global markets took a hit with the commencement of Trump’s tariffs. Japan’s Nikkei was down nearly 7%, whereas the S&P 500 also tanked 6%. CoinGape reported that even Bitcoin and major alts crashed 6-12%.
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