The Fed raised interest rates yesterday unanimously and risk assets rose along with it. 🔥
Gold, Nasdaq, Bitcoin, S&P—everything was green.
And what’s interesting here isn’t what went up. It’s what didn’t.
Tightening monetary policy usually pulls the currency. Rates rise, the dollar rises.
The DXY ended the following 24 hours at -0.01%. Flat.
Gold led the way, up +2.28%.
Bitcoin +1.68%, Nasdaq +1.73%, S&P +1.10%.
In other words, the scarce asset and the duration asset moved together while the currency didn’t go anywhere.
The 25-point hike was already more than 90% priced in, so what was traded over those 24 hours wasn’t the decision. It was the interpretation of it.
And the takeaway was: the market doesn’t believe this tightening will work.
That’s exactly what I’ve been arguing here. The thing setting prices in this regime isn’t the policy rate.
What was supposed to be bearish is being read as bullish, because the problem the Fed is trying to tighten isn’t responding to interest rates.
Gold, Nasdaq, Bitcoin, S&P—everything was green.
And what’s interesting here isn’t what went up. It’s what didn’t.
Tightening monetary policy usually pulls the currency. Rates rise, the dollar rises.
The DXY ended the following 24 hours at -0.01%. Flat.
Gold led the way, up +2.28%.
Bitcoin +1.68%, Nasdaq +1.73%, S&P +1.10%.
In other words, the scarce asset and the duration asset moved together while the currency didn’t go anywhere.
The 25-point hike was already more than 90% priced in, so what was traded over those 24 hours wasn’t the decision. It was the interpretation of it.
And the takeaway was: the market doesn’t believe this tightening will work.
That’s exactly what I’ve been arguing here. The thing setting prices in this regime isn’t the policy rate.
What was supposed to be bearish is being read as bullish, because the problem the Fed is trying to tighten isn’t responding to interest rates.
