If the Fed raises rates tonight, I actually think US stocks could rise instead🤔 This Fed meeting is hiding an “anti-common-sense” logic
At 2:00 a.m. Beijing time on September 17, the Federal Reserve will release its interest rate decision. The market now practically treats a “25 basis point rate hike” as a sure thing.
But there’s a point of anti-common-sense here: if Waller really hikes rates, US stocks might not necessarily fall; rather, if he chooses not to hike in order to protect the market, companies’ borrowing costs could end up being pushed even higher.
Here’s a simple example: if you lend someone money for 10 years, the biggest fear is that when the money is paid back, it will already be worth less. If inflation keeps running unchecked and the central bank delays action, you’ll definitely demand higher interest before you’ll be willing to lend.
This creates a rather tangled situation: the central bank clearly didn’t raise rates, yet the market itself raises the price of long-term borrowing. The costs for companies issuing bonds and building AI data centers would all go up.
Conversely, if Waller uses a limited rate hike this time to make everyone believe that inflation is under control—and there won’t be to need for even more aggressive “remedial measures” later—the risk premium for borrowing long-term could actually come down.
In plain terms, whether this rate hike helps US stocks catch their breath this time depends on whether Waller can use the tightening right now to rebuild market trust in the future.
The logic flowing into US stocks is quite straightforward: worries about runaway inflation ease, long-term rates may stabilize, there’s one less layer of pressure on corporate financing and valuation, and earnings can still hold up—so US stocks may not keep falling after all.
But don’t just treat a rate hike as a negative to buy into. What the market is actually “buying” is whether this action can contain the situation. If oil prices keep refusing to come down and inflation continues to move higher, people may shift from “one hike should be enough” to “there may be more hikes coming later.” As long-term rates move higher again, tech stocks’ valuations could face renewed pressure.
So this meeting is more like a credibility test: how much is hiked today is just the action. What matters is what the market believes about how much more may be needed afterward—only then can we tell whether this action is actually effective.
So after the decision is released, we’ll keep watching to see whether Waller stabilizes expectations—or whether he opens the door to yet another rate-hike cycle.
#美联储加息是否已成定局
At 2:00 a.m. Beijing time on September 17, the Federal Reserve will release its interest rate decision. The market now practically treats a “25 basis point rate hike” as a sure thing.
But there’s a point of anti-common-sense here: if Waller really hikes rates, US stocks might not necessarily fall; rather, if he chooses not to hike in order to protect the market, companies’ borrowing costs could end up being pushed even higher.
Here’s a simple example: if you lend someone money for 10 years, the biggest fear is that when the money is paid back, it will already be worth less. If inflation keeps running unchecked and the central bank delays action, you’ll definitely demand higher interest before you’ll be willing to lend.
This creates a rather tangled situation: the central bank clearly didn’t raise rates, yet the market itself raises the price of long-term borrowing. The costs for companies issuing bonds and building AI data centers would all go up.
Conversely, if Waller uses a limited rate hike this time to make everyone believe that inflation is under control—and there won’t be to need for even more aggressive “remedial measures” later—the risk premium for borrowing long-term could actually come down.
In plain terms, whether this rate hike helps US stocks catch their breath this time depends on whether Waller can use the tightening right now to rebuild market trust in the future.
The logic flowing into US stocks is quite straightforward: worries about runaway inflation ease, long-term rates may stabilize, there’s one less layer of pressure on corporate financing and valuation, and earnings can still hold up—so US stocks may not keep falling after all.
But don’t just treat a rate hike as a negative to buy into. What the market is actually “buying” is whether this action can contain the situation. If oil prices keep refusing to come down and inflation continues to move higher, people may shift from “one hike should be enough” to “there may be more hikes coming later.” As long-term rates move higher again, tech stocks’ valuations could face renewed pressure.
So this meeting is more like a credibility test: how much is hiked today is just the action. What matters is what the market believes about how much more may be needed afterward—only then can we tell whether this action is actually effective.
So after the decision is released, we’ll keep watching to see whether Waller stabilizes expectations—or whether he opens the door to yet another rate-hike cycle.
#美联储加息是否已成定局