A Bear Flattener Builds As The Fed Meets Against A Market Favoring Hikes

Russell Thompson on this week’s FOMC, CLARITY’s narrowing window before recess, a fragile Iran ceasefire, and rising break-evens

Bitcoin trades a quiet range around 65,200 as markets look ahead to Wednesday’s FOMC, where future s price a 70.6 percent chance of a hold and a 29.4 percent chance of a hike · a call Russell disputes. CLARITY faces a narrowing path after Senate Majority Leader John Thune said passage before the 7 August recess deadline looks unlikely, with Polymarket now at 38 percent. A fragile lull in Iran-US strikes has let oil ease back, while US Treasuries show a distinct bear flattener with the 10-year up six basis points to 4.63 percent. Break-evens and truflation measures both ticked higher on the week, a shift from the disinflation narrative of recent weeks.

CLARITY Act Path Narrows As Recess Deadline Looms

Senate Majority Leader John Thune said on Thursday that it is very unlikely CLARITY gets through the Senate before the 7 August summer recess. Polymarket has CLARITY passage at 38 percent, having whipsawed between the low 30s and high 40s through the week on headline-driven news. Thune did raise the possibility of starting the process now with a vote to follow once the Senate returns after recess, which market participants believe could soften some of the disappointment if the deadline is missed. Russell was explicit that if CLARITY is not tabled and passed before 7 August, a pullback in Bitcoin is likely regardless of any process that has been started in the meantime. The market’s working assumption remains that a miss on the 7 August deadline effectively kills the bill for this cycle. Deadline risk intact: Polymarket at 38 percent for 2026 passage, down slightly on the week. Thune’s comments confirm the market’s base case · m miss 7 August and the bill is dead, with Bitcoin downside the likely consequence irrespective of any partial process started beforehand.

Iran-US Lull Lets Oil Ease Back

Two consecutive nights without strikes between the US and Iran have allowed oil to regain some footing, with prices lower this morning after both sides continued hitting strategic and military targets in the region through last week. Russell expects some movement on the situation this week but characterised the current state as largely "as we were."

Light Data Week Gives Way To A Heavy US Calendar

Last week’s data was thin. Global manufacturing PMI came in a touch strong at 53.6 against 51 expected, UK retail sales rose, and UK inflation generally beat to the downside. The ECB held rates, and European PPI printed considerably lower at minus 0.3 percent against plus 0.2 percent expected. This week is far busier. The Fed meets Wednesday, with PCE and US GDP due Thursday, and Chicago PMI alongside the University of Michigan inflation expectations and consumer sentiment numbers · Russell’s preferred series · on Friday, after the Fed decision.

Fed Funds Pricing Still Leans Toward Hikes

Fed funds futures price a 70.6 percent chance of a hold at Wednesday’s meeting and a 29.4 percent chance of a hike. Russell maintains his view that no hike will materialise, though he acknowledges the market disagrees. December futures price an 11.5 percent chance of a hold and 88.5 percent chance of at least one hike by year end, while one-year-forward futures price just 0.4 percent for a cut, 7.5 percent for a hold, and 92.1 percent for at least one hike, with some probability attached to as many as four hikes · pricing Russell calls "absolutely crazy." Horizon Cut Hold Hike(s) · 70.6% 29.4% 29 July FOMC December · 11.5% 88.5% One year out 0.4% 7.5% 92.1% Source: Hilbert Trader’s Call 27 July 2026 Russell Thompson, CIO I'm going to stick to my guns here. There is not going to be a rate hike. That's my personal opinion, but the market clearly does not agree with me.

Bear Flattener Builds In US Treasuries

US 10-year yields sit at 4.63 percent, six basis points higher on the week, while 2-year yields are at 4.30 percent, up 10 basis points · a distinct bear flattener. Russell does not see bond market jitters bleeding into equities while 10-years stay under 5 percent, though a break above that level would carry a real chance of spooking equity markets. US 30-year yields are near 20-year highs. Equities were little changed: Nasdaq is roughly flat on the week around 28,500, and the S&P sits near 7,480. Gold rose about 80 dollars to 4,095, and the dollar index firmed about 60 basis points to 101.15. Oil was volatile, briefly topping 100, before settling largely unchanged with WTI at 84.6 and Brent at 86.7. Asset Level ~28,500 (flat wk) Nasdaq S&P 500 7,480 4,095 (+80 wk) Gold DXY 101.15 (+60bp) WTI 84.6 (+1.6 wk) Brent 86.7 (-1.3 wk) Natural gas 2.82 (flat) Source: Hilbert Trader’s Call 27 July 2026

Inflation Expectations Tick Back Up

Break-evens, one of Russell’s preferred inflation gauges, have climbed to 2.26 percent, up eight basis points on the week after coming off sharply in June. The truflation measure, which Russell regards as a better read on real inflation, is at 2.1 percent, up 35 basis points on the week · a reversal from the disinflation narrative that drove Bitcoin’s rally in prior weeks. A shift worth watching: Both break-evens and the truflation gauge rose on the week, the first meaningful uptick after weeks of disinflationary prints. If this persists, it would undercut the "fade the hikes" thesis that has supported Bitcoin recently.

Hilbert Global Liquidity Index Softens

The Hilbert Global Liquidity Index reads 6.5, modestly positive, but the Z-score has fallen to minus 1.36, down 1.25 on the week · a moderate tightening of liquidity in the financial system. Reading Liquidity metric Interpretation Composite index (0·10) 6.5 Modestly positive Z-score -1.36 Moderate tightening, -1.25 on week Source: Hilbert proprietary global liquidity framework, Trader’s Call 27 July 2026

Implied Vol Premium Widens, Put Skew Persists

Implied volatility continues to normalise relative to realised: implied is around 36.5 against realised at 27.5, a nine-point premium, versus the unusual inversion seen three to four weeks ago when realised traded above implied. DVol on Deribit is at 37, up a point on the week. Five-delta puts carry 49 percent implied vol against 39 percent for calls, a 10-point premium, with at-the-money vol at 36 percent · a 13-point premium for puts and a 3-point premium for calls over at-the-money. Russell notes a slight smile has returned, in contrast to recent weeks when call wings traded at a discount to at-the-money.

Bitcoin Range-Bound, Max Pain Near 64,000

Bitcoin traded as high as 65,500 this morning before settling back to 65,200. Short-term moving averages remain mildly bullish, with resistance at 68,000 and much stronger resistance at 70,000 through 74,000 · a level that would need a daily close above to confirm a medium-term bull market, roughly 9,000 dollars away. Support sits at 65,000, with further layers at 62,000 and 58,000. Gamma is concentrated at 70,000, 72,000 and 74,000 on the topside, with market makers likely to chase a break higher; downside gamma sits at 60,000 and more meaningfully at 50,000. Open interest in calls (305,000) now materially exceeds puts (130,000), and the end-of-month max pain level sits at 64,000. Russell expects a drift lower this week within a 62,000·68,000 range, with the market plausibly settling near the 64,000 max pain level by month end. Ethena’s USDe supply is unchanged on the week at 4 billion dollars, with yield still at 4.1 percent. BTC level Significance 74,000 Daily close needed to confirm medium-term bull market 70,000·72,000 Strong resistance, heavy gamma 68,000 First resistance 65,200 Current spot 65,000 First support 64,000 End-of-month max pain 62,000 Second support 60,000 Downside gamma begins 58,000 Third support 50,000 Major downside gamma Source: Hilbert Trader’s Call 27 July 2026 intended for professional and institutional investors only. Hilbert Group AB is listed on Nasdaq First North Growth Market.