Payrolls Come In Negative And The Curve Bull Steepens: Wednesday’s CPI Is The Reset

Russell Thompson on a shock jobs report, cloture filed on CLARITY, coordinated yen intervention and a growing conviction that the Bitcoin bottom is in

Non farm payrolls printed at negative 23,000 against an expectation of positive 80,000, average hourly earnings undershot on both the monthly and annual measures, and Treasury yields collapsed. Critically the move was a bull steepening, with two year yields falling markedly more than tens, which is the healthy configuration for banks, liquidity and risk appetite. December hike pricing has fallen from the nineties on Friday morning to 78 percent, and Wednesday’s CPI print is the event that could reset the whole curve. Thune has filed cloture on CLARITY with a procedural vote set for 15 September, though 2026 passage odds sit at just 21 percent. Russell is increasingly convinced the Bitcoin bottom is in, while August seasonality and a 63,000 max pain argue for drift rather than breakout.

Payrolls: Negative 23,000 And A Healthy Bull Steepening

All of last week’s headlines came from Friday. Average hourly earnings came in very cold at 0.1 percent against an expected 0.3 percent, with the year on year rate at 3.2 percent against 3.5 percent. The real shock was non farm payrolls, which printed at negative 23,000 against an expectation of positive 80,000. US Treasury yields collapsed on the back of it. The important detail is the shape of the move. Over the past month the curve had been bear steepening, with tens and thirties sold heavily. Friday delivered a bull steepening instead: two year yields dropped markedly more than tens, leaving the two to ten spread at 44 basis points but for the right reason. A steep curve with nominally lower rates is a very profitable configuration and a healthy one for the US economy. Banks borrow at the front end and lend at the back end, so the steeper the curve the more profitable they are, the more liquidity they provide to the market, and the greater the risk appetite that follows. Expected Indicator Actual Verdict +80,000 Major shock Non farm payrolls -23,000 Average hourly earnings (MoM) 0.1% 0.3% Very cold Average hourly earnings (YoY) 3.2% 3.5% Cold ISM manufacturing PMI 55.6 54.0 Hot ISM prices paid 71.1 70.3 Slightly higher Services PMI 54.1 54.5 prior Slightly cold Source: Hilbert Trader’s Call 10 August 2026 Why the shape matters: Bear steepening is the market punishing the long end. Bull steepening is the front end repricing lower on weak data while the curve stays positively sloped. The second is the configuration that funds bank balance sheets, expands liquidity and supports risk assets. Friday delivered the second for the first time in weeks.

CPI Wednesday: The Number That Resets The Market

Wednesday is the significant day of the week. CPI is expected at around 3.4 percent against 3.5 percent previously, with the ex food and energy measure expected at 2.5 percent against 2.6 percent. PPI follows on Thursday and retail sales on Friday, though retail sales arrive after the main event. Russell’s view is that a cold CPI print on Wednesday would force this market to reset. Last month’s CPI was again a cold number, and a repeat would prompt a real rethink about where the Fed actually is. The position he has held for weeks remains unchanged: hiking rates in the current environment would be crazy, the Fed is on hold, and the data implies the next move is ultimately a cut. The market continues to disagree. Rate hike expectations have come off substantially since Friday but remain, in his assessment, very unrealistic. Friday also brings University of Michigan consumer expectations and the one and five year inflation expectations series, which he singles out as the numbers that matter most because the Fed is forward looking and wants to see expectations falling. Break evens support that direction: five year inflation break evens sit around 2.2 percent, down from roughly 2.6 percent. Russell Thompson, CIO "If we get a cold number on CPI this market is going to reset. I still maintain the view that they would be absolutely crazy to hike rates in the current environment. I think the data will mean that their next move ultimately will be a cut. But the market, as I say every week, definitely does not agree with me."

Fed Pricing: December Hike Odds Fall From The Nineties To 78 Percent

The repricing since Friday has been substantial but incomplete. For the September meeting the market now prices a 54 percent probability of a hold against 46 percent for a hike, meaning the majority has finally moved to the hold camp, a position Russell agrees with. December stands at 22 percent hold against 78 percent hike, having been in the nineties on Friday morning. A meaningful share of that pricing implies two hikes by December. One year out, in July 2027, the curve shows just 0.3 percent for a cut, roughly 12 percent for a hold and 88 percent for at least one hike, with some participants positioned for three or four hikes by that date. Russell regards those expectations as ridiculous. Horizon Hold Hike Note September 54% 46% Majority now on hold December 22% 78% Was in the 90s on Friday morning Cut priced at 0.3% July 2027 ~12% 88% Source: Hilbert Trader’s Call 10 August 2026

CLARITY: Cloture Filed, Procedural Vote Set For 15 September

CLARITY did not get voted on, but slightly under the radar Thune filed cloture. A procedural vote is now scheduled for 15 September at 2:15. This is not a Senate vote to put CLARITY into law; it is a procedural test that establishes whether the chamber is willing to set a date and time for a full vote. It requires 60 votes to clear, and Russell believes it will pass. The arithmetic on the substantive vote requires six or seven Democrats to cross the aisle. In the House the bill was genuinely bipartisan, but the Senate has been split very firmly along party lines. There are roughly 11 Democrats in the Senate who are pro crypto or materially so, and there is little for them to lose by supporting the procedural test that puts the bill to a full vote and onto Trump’s desk. The substantive obstacle remains the jurisdictional question: whether state district attorneys or federal authorities will govern the framework. There is no real precedent for a federal law of this type being overseen by state district attorneys, but the overwhelming majority of state district attorneys are Democrats, which is why the Democrats want to push in that direction. The Republicans have said no. Issues around Trump, how much money he has made, and how that would be prevented also remain live. Odds on CLARITY passing in 2026 currently sit at 21 percent. Russell notes a degree of fatigue with the topic, but maintains that it still has a decent chance and would be a catalyst for an upward move if it clears, since some form of US regulatory framework is better than none. Congress has broken for summer recess and returns on 14 September. The market is not paying for it: At 21 percent for 2026 passage, the market is pricing CLARITY as unlikely. That is precisely what makes it asymmetric: a bill widely written off, with a procedural vote already scheduled and a plausible path to 60 votes, would be a genuine catalyst rather than a priced in event.

Iran: A Deal That Achieves Very Little

Iran and Oman appear close to some form of deal, but Russell does not consider it a game changer. The terms would mean the United States, Israel and anyone Iran considers contrary to its interests are banned from the Strait of Hormuz, which achieves relatively little. Over the weekend Trump indicated he would be willing to walk away from the conflict without a nuclear deal in return for the strait being reopened. The comparison Russell drew was to Carter in 1979. Carter lost the 1980 presidential election substantially over the Iranian hostage crisis, including an aborted rescue attempt in Tehran, and the 52 hostages were released within minutes of Reagan taking office in January 1981. The sense is that Trump may be walking down the same dead end corridor. Oil has nonetheless been remarkably well contained and appears to be looking through the situation, helped by the recognition that with November midterms approaching, the last thing Trump wants is to lose seats on a perception that he is at war with Iran, given the US public clearly does not support it.

FX: Coordinated Intervention In Yen, And The Fed Chooses Euro

There was considerable speculation around intervention during the week, and it materialised. The Bank of Japan intervened in dollar/yen, with rumours putting the size at around 55 billion dollars, and dollar/yen collapsed on the back of it. That was followed by the Fed intervening in euro/yen, which is the more interesting detail. It is very rare for the Fed to intervene outside of some form of accord, so the Bank of Japan would have requested it. The intervention itself was relatively minor at around five or six billion dollars, but the choice of the euro rather than the dollar as the funding leg has set the cat among the pigeons in the eurozone: the Fed is pushing the euro down because it would rather sell the euro against the yen than sell the dollar against the yen. Read the funding leg: The size of the Fed’s intervention was small, but the currency it chose is a signal. Selling euro against yen rather than dollar against yen tells the market where the Fed wants pressure applied, and the eurozone is now on the receiving end of a policy decision it had no part in.

Markets And Liquidity: Ten Years At 4.64, Duration Premium The Anchor

Ten year yields sit at 4.64 percent, still materially above the 4.5 percent threshold, with two years at 4.20 percent and the two to ten spread at 44 basis points. Russell’s position remains that this market will not worry about US ten years until they break 5 percent. Should CPI push tens through 5, thirties would move into the high fives, which would start creating problems that the US equity market would not like. Elsewhere Nasdaq is just under 30,000, the S&P is at 7,760, gold is around 4,350 and the dollar index is a little lower. WTI is at roughly 78.3 dollars and Brent at 83.5, with natural gas quiet at 2.78. On the liquidity framework, the five factor model reads 6.6 and the six factor model 6.28, indicating moderate liquidity expansion with nothing to get particularly worried or excited about. Within the six factor model, five of the six factors are quite constructive. The single factor holding expansion back is the duration risk premium, which is to be expected given the stresses in the US Treasury market. Looking further out, amendments to the SLR are going through and a drawdown on the TGA into the midterms could deliver a liquidity injection in the final quarter, which would support an equity rally and a move in Bitcoin.

Bitcoin: Seasonality Against It, But The Bottom Looks In

August is traditionally a bearish month for Bitcoin. Over the last 15 years, excluding the earliest days, roughly 30 percent of Augusts have been up months and 70 percent down. The up months have delivered modest gains in the range of 1.1 to 1.7 percent, while the median August is a decline of 7.5 percent. Summer holidays and the doldrums mean Bitcoin has a genuine seasonal headwind to fight. Max pain on end of August options sits at 63,000 with around 3.7 billion dollars of options expiring there, against spot around 65,000. That points toward a middle of the range August, roughly 62,000 to 68,000 absent an outlier, with a tendency to drift lower rather than higher. September is a different picture: 7.2 billion dollars of options are already open into the back end of the month with max pain at 70,000. The shape of that suggests getting through August, getting a vote on CLARITY, and being set up rather better thereafter. Russell is becoming more convinced week on week that the bottom is in. The one scenario he does not like for Bitcoin is a resurgence of inflation, and his view is that inflation is more benign than the market is pricing. Price action supports the case: Bitcoin is trading well, holding in on the downside, with bids on dips. Russell Thompson, CIO "I am getting more convinced week on week that the bottom is in. Short of inflation hanging in there, and I believe inflation is nowhere near as bad as the market is pricing it, I think the bottom is in in Bitcoin."

Technicals And Options: Resistance At 67 To 72, No Downside Gamma

For today the short term levels are around 65,800 on the topside and 64,500 on the downside. On a medium term view there is still a substantial band of resistance between 67,000 and 72,000, with heavy moving average resistance in that zone. There is a lot of wood to chop through before Bitcoin can be described as being in a medium term bull trend, and it is not there yet. Above that, clearing and holding 74,000 would set up a move back into the mid to high 80,000s. On the downside the medium term level is 63,200, followed by the usual suspects at 60,000 and 58,000. Russell would not want to see 58,000 give way, as that would mark new lows and would target the 48,000 to 50,000 zone. The gamma profile is a further reason to think the bottom may be in. There is a meaningful amount of gamma on the topside between 72,000 and 75,000, where market makers would start chasing the market as it moves up. On the downside there is very little gamma and not much open interest, with the level only really kicking in around 50,000. Even a break to new lows therefore carries limited forced liquidation risk, which Russell described as quite surprising. In the options market at the money volatility is around 30 percent, five delta puts are at 42.5 and five delta calls are at 30, leaving a 12.5 point premium on the put wing and a completely flat smile on the call side, meaning there is no value at all in selling calls. Realised volatility is around 21 against implied at roughly 28.5, a premium of seven to seven and a half points that has widened out and is healthy. Friday was volatile and Wednesday and Thursday could well be, particularly on any outlier in the inflation numbers. In DeFi, Ethena is broadly unchanged at 3.9 billion dollar TVL with a yield of around 4 percent APY, and stablecoin issuance is subdued. BTC level Significance 74,000 Clear and hold opens mid to high 80,000s 72,000 to 75,000 Topside gamma; market makers chase 67,000 to 72,000 Heavy resistance and moving averages 65,800 / 64,500 Short term topside and downside for today 63,000 End of August max pain (3.7bn expiring) 63,200 First medium term support 60,000 / 58,000 Next supports; 58,000 must hold 48,000 to 50,000 Target if 58,000 breaks Source: Hilbert Trader’s Call 10 August 2026 intended for professional and institutional investors only. Hilbert Group AB is listed on Nasdaq First North Growth Market.