“A bit counterintuitive. The Federal Reserve raised rates—why didn’t the crypto market or the U.S. stock market crash?

Last night, the Federal Reserve finally raised rates. By 25 basis points, it lifted the policy rate to 3.75%–4.00%, and it passed unanimously, 12–0, directly contradicting Trump.

More importantly, it’s the dot plot. The median policy rate for year-end rose to 4.1%, which implies there will likely be another 25-basis-point hike this year. December, therefore, naturally becomes the window worth watching most.

But interestingly, the stock market wasn’t spooked by the rate hike. The Nasdaq closed nearly flat, while semiconductors actually led the gains—SOXX was up about 1%. What truly dragged the market down were energy stocks. As oil prices fell by more than 3%, the energy sector clearly declined. In other words, the market is no longer pricing “rate hikes = a stock market crash,” but rather “who can withstand higher interest rates.”

Why can U.S. stocks still hold up? Answer: The U.S. economy is simply too strong.

In August, retail sales rose 1.2% month over month, clearly beating expectations; core retail sales grew by 1.4% even more. The Federal Reserve even raised its forecast for this year’s GDP growth from 2.2% to 2.3%, while also lowering its unemployment rate forecast from 4.3% to 4.1%.

Also, regarding why Wachter thinks 10-year U.S. Treasury yields are above 5%, the explanation he gives is very worth noting:

First, the economy itself is strong;

Second, AI giants are疯狂? making massive Capex and issuing debt, and they’re competing with the U.S. government for capital;

Third, global geopolitical risks have increased the cost of capital.

This actually explains the most important market contradiction right now:

AI drives economic growth, and it also drives demand for capital; the stronger the economy is, the harder it is for the Fed to cut rates; and at the same time, AI and the U.S. government are competing for money.

So going forward, what may truly determine the valuation of U.S. stocks might not be the 25 basis points anymore, but rather how soon Trump can end this war farce.

If Iran and Iraq? can reach a ceasefire? in two months and oil prices plunge and inflation falls, then the Fed would have no reason to hike rates again, and the big bull run in Bitcoin and U.S. stocks would restart!”

What this passage is saying is: rate hikes themselves usually suppress the valuations of risk assets, but if the market has already expected the hikes, and the economy and corporate earnings still show resilience, the stock market and the crypto market may not necessarily fall immediately.

The core logic has four layers:

Negative news may have already been factored in ahead of time.

What the market cares about more is whether rate hikes are “above expectations” and whether the future interest-rate path will be more hawkish. If a 25-basis-point hike matches the general expectations, investors may not necessarily sell off aggressively after the news is released.

Strong economic data provides support.

If retail, GDP forecasts, and unemployment rate forecasts show that U.S. consumption and employment remain strong, the market will believe that companies’ revenues and earnings have some capacity to withstand it. Therefore, funds may shift from “all stocks are afraid of rate hikes” to selecting companies that can maintain growth in a high-interest-rate environment, such as some technology and semiconductor firms.

High interest rates are not determined only by the Federal Reserve; they also reflect the balance of capital supply and demand.

The article mentions that long-term U.S. Treasury yields have been rising. Besides monetary policy, this may also be related to the government issuing large amounts of debt, AI companies expanding capital expenditures and financing, and geopolitical uncertainties. Simply put, there are more parties in the market that “need to borrow money and need capital,” which means capital may become more expensive.

AI has a two-sided effect.

AI investment can boost technology companies’ revenue expectations, economic activity, and market confidence; but large data center, chip, and energy investments also increase financing demand and may push up long-end interest rates. This creates a tug-of-war for overvalued assets: growth expectations are a positive, while rising funding costs are a negative.

The discussion at the end of the article about oil prices, geopolitical conflicts, and a “bull market restarting” is a conditional view, not a guaranteed outcome. If energy prices fall and help cool inflation, pressure on monetary policy may ease; however, oil prices, inflation, interest rates, corporate earnings, and cryptocurrency market liquidity will all jointly influence future trends. You cannot infer that Bitcoin or U.S. stocks will definitely rise based on just one event.