The market has "forgiven the war," but has not understood the Federal Reserve.
Source: Wall Street Intelligence Circle
The market has forgiven war, but has yet to understand the Federal Reserve.
The day after the Federal Reserve announced its decision, a strange scene played out in global markets: "the dollar and US stocks rose, while everything else fell":
The US stock market rose across the board on Thursday—the Dow Jones up 0.14%, S&P 500 up 1.08%, and Nasdaq up 1.91%;
The US Dollar Index at one point hit the 100.92 level intraday, while the 10-year Treasury yield returned to 4.45%. Meanwhile, gold, bitcoin, and crude oil saw declines of varying degrees, with gold prices about to fall below $4,200.
First, the rise in US stocks was due to Trump single-handedly creating positive news for the market. The “Waller Shock” was originally meant to plunge the market into a deep hole.
· The first antidote: immediately after the US stock market closed on Wednesday, a Middle East peace memorandum was released to end the blockade, with a post shouting that “oil is flowing”—US stock futures turned upwards;
· The second life-saver: a few hours before the US market opened on Thursday, it was announced that Apple and Intel would jointly make chips in the US (an aggressive AI stimulus, precise life support). Without this news, it would have been difficult for US stocks to rise last night.
Whenever the stock market falls, Trump will immediately find a way to make it rise (he simply can’t let it fall). This indirectly shows that the market now is so fragile it’s basically just a skeleton (AI momentum), and it has to be fueled constantly with “super positive” news.
Second, oil prices have slightly declined, volatility has dropped sharply, and the market has almost fully responded to news from Iran. For stocks, the benefits of falling oil prices have likely been digested—the market can only rely on itself going forward, and the only thing the market now believes in is AI.
Third, gold is about to fall below $4,200, the 10-year Treasury yield is back at 4.45%, and the dollar index has surged—these three signals are highly consistent, all pricing in the “Waller Shock.” Waller’s attitude towards the market is “no forecasts, no comfort, no responsibility.” He wants to restore something long missed—surprise. Waller will use one “unexpected plunge” and one “unexpected surge” to make the market forget the idea of a “central bank backstop.”
Next Monday marks the beginning for global markets, having “forgiven war,” to be forced to “understand the Federal Reserve.”
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
You may also like
NEAR Traders Are Pleased to See the Altcoin Break Above $5 and Trade Above, Will This Momentum Hold?
After Toshiba reported news of HDD production expansion, Morgan Stanley turned more bullish rather than bearish.
Morgan Stanley’s research indicates that the market has seriously overestimated Toshiba’s expansion scale — the doubling of capacity at its Philippines plant over two years translates to an annualized growth rate of about 30%, which is similar to the overall industry supply growth rate and far lower than demand growth. More importantly, channel checks show that Seagate and Western Digital have no intention of following suit with capacity expansion, and there are no signs of loosening in industry pricing.
BitMine lifts ETH holdings to 6 million as price holds above $2,700
Energy & Utilities Roundup: Market Talk
The latest Market Talks covering Energy and Utilities. Published exclusively on Dow Jones Newswires at 4:20 ET, 12:20 ET and 16:50 ET. 0637 GMT - SK Innovation is likely to benefit from higher lubricant base oil prices, LS Securities analyst K.H. Chung says. The South Korean refiner is a global leader in premium lubricant base oils, producing about 80,000 barrels of Group III base oils a day, Chung writes in a note. She expects the supply shortage of lubricant base oils to persist for more than a year. Tight supply of kerosene and diesel and wider refining margins could also continue to boost the company's earnings, she adds. LS Securities upgrades the stock to buy from hold and raises its target price to 187,000 won from 126,000 won. Shares end 2.6% higher at 158,000 won. (kwanwoo.jun@wsj.com) 0113 GMT - YTL Power International could see upside from its expanding data-center and AI infrastructure, as well as renewed power-generation opportunities, says Hong Leong IB analyst Daniel Wong in a note. Its Kulai and Sedenak West hubs offer 2.4GW of potential data-center capacity, while its AI-GPU capacity could scale to 100MW or more and support a new services business. The procurement of seven gas turbines totaling 5.25GW also positions YTL for power-generation growth and supports its expanding data-center pipeline, he reckons. Higher water tariffs and planned treatment plants at its unit Ranhill Utilities should support earnings as Johor's water demand rises, he adds. Hong Leong raises its target price to 8.08 ringgit from 7.58 ringgit and keeps a buy rating. Shares are 1.4% higher at 5.62 ringgit. (yingxian.wong@wsj.com) The price fetched by Amplitude Energy for its natural gas in 1Q should improve on the prior three months, supporting growth in revenue. That's the view of Bell Potter analyst Stuart Howe, who points to higher gas volumes in the quarter. Also, spot natural gas prices recovered to a quarterly average of A$9.77 per gigajoule, from A$8.42 per gigajoule in 4Q of FY26. Amplitude is due to report its 1Q p
Crypto prices
More
