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View detailsSelling Storm Spirals Out of Control! U.S. Treasuries Hit by a Lightning 'Five-Whip' Overnight
In recent weeks, the sell-off in the U.S. Treasury market had been relatively orderly. Until Wednesday, when alarm bells suddenly rang out across the board.During the European session that day, first came hawkish comments from Iranian officials at the United Nations that pushed Brent crude back above $100 a barrel. Then, during the New York session, a typically unremarkable PMI business activity survey jolted markets, showing surprisingly strong U.S. economic momentum and persistent inflation pressures. As the day progressed, the Treasury sell-off intensified — a hawkish Fed governor, the Treasury's failure to raise its buyback ceiling, and an exceptionally weak 5-year note auction all sent bond market sentiment to the freezing point.All these bearish "five whips" combined into a "perfect storm," driving the single-day rise in 10-year Treasury yields to its largest since April 2025, when Trump's "Liberation Day" tariff announcement roiled markets. According to industry estimates, this was a rare 4-standard-deviation extreme move.By the close of the New York session, the 10-year Treasury yield surged 15.08 basis points to 5.112%, breaking through recent highs to levels not seen since 2007.The 5-year yield, meanwhile, climbed above the 5% mark for the first time since 2007, rising 16.1 basis points to 4.996% at the close.The 30-year Treasury yield rose 9.5 basis points on the day to 5.397%, also refreshing its highest level since 2004...From the thorny U.S.-Iran conflict to the seemingly indestructible U.S. economy, Christopher Sullivan, chief investment officer at United Nations Federal Credit Union, said bluntly: "To many people right now, holding bonds simply doesn't make logical sense."As an indicator that moves inversely to bond prices, Treasury yields have been climbing for months, and the spillover effects are sweeping through the broader macroeconomy: from rising mortgage and credit card rates to shrinking appetite among private equity firms for debt-financed M&A, nothing has been spared. Despite the looming U.S. midterm elections and Treasury Secretary Bessent's efforts to calm yields through a bond buyback program, the selling momentum in the bond market remains unshaken.At the same time, the rise in yields does not yet appear to be effectively cooling an overheating economy. This has only driven yields even higher — investors are increasingly betting that truly containing inflation will require the Fed to hike far more aggressively than previously expected.Treasuries Hit by Lightning 'Five-Whip'The gloom over the U.S. bond market was already visible as Americans woke up on Wednesday morning. During the European trading session, oil prices shot higher, and traders hoping for a U.S.-Iran diplomatic breakthrough at this year's UN General Assembly were bitterly disappointed: Iran's president made clear that Iran would not fully reopen the Strait of Hormuz until sanctions are lifted.As a result, international benchmark Brent crude reversed its recent slump, with intraday highs again breaking above $103 per barrel. Because persistently higher fuel prices would inevitably exacerbate overall inflation, Treasury yields have remained highly correlated with international oil prices in recent months."The market is frustrated because we thought we would get a deal at the UN this week to de-escalate the Middle East situation, and that didn't happen," said Bob Michele, chief investment officer and head of global FICC at J.P. Morgan Asset Management.This also set Treasury yields on an upward path early in the New York session. Then, at 9:45 a.m. New York time, a monthly business survey that rarely moves markets ignited the second bearish "whip" of the day — S&P Global released its flash U.S. Composite PMI.The data showed the S&P Global U.S. Composite PMI flash reading rose to 58.4 in September, up from 56.0 in August and well above the market expectation of 55.3. The report, which surveys both services and manufacturing firms, showed U.S. business expansion at its fastest pace in more than five years, with employment growth also hitting a four-year high. S&P's commentary stressed that "aside from the demand surge when the economy reopened after COVID lockdowns, the latest improvement in U.S. business activity is the strongest since early 2015."At that moment, Izaac Brook, U.S. rates strategist at RBC Capital Markets, was on a flight from New York to Minnesota when the news alerts flooded in. Before switching his phone to airplane mode, he quickly glanced at the market screens — Treasury yields across tenors were spiking. Hours later, when the plane landed, he found "thousands" of messages on his phone, with people asking what had happened."It's extremely hard to maintain a constructive mindset in this environment," Brook admitted. "Looking at current yield levels, you might find them attractive. But we've been playing this game for the past six months — every time people try to draw a so-called technical floor, yields just keep breaking higher."Given that the Fed had just implemented its first rate hike in three years last week, markets were already fraught with concerns about further tightening. Just after 10 a.m. New York time, hawkish remarks from Fed Governor Michael Barr added fuel to the fire."Inflation remains above our 2% target, and there are no signs it will move toward target in a reasonable timeframe," Barr said in a speech in Chicago. He warned that the risks preventing the Fed from achieving its inflation goal on schedule are rising.Dhiraj Narula, U.S. rates strategist at HSBC, said the core anxiety among investors is that "even though a large part of current price pressures stems from supply-side shocks, the Fed still shows a strong determination to hike to fight inflation, suggesting it could fall into a nearly obsessive, persistently hawkish stance."Meanwhile, bond traders were also waiting for the Treasury to announce the size of its bond buyback operation scheduled for Thursday. The announcement came shortly thereafter — the buyback ceiling remained at $6 billion — disappointing many market participants who believed such a meager number would do little to halt the selling tide.The Treasury's bond buyback program is one of the tools Treasury Secretary Bessent has used to slow the rise in yields. However, analysts said a single $6 billion cap on long-dated bond buybacks is insufficient to have a meaningful impact on a Treasury market exceeding $30 trillion, nor does it address the root causes driving yields higher."Soaring energy prices and strong economic activity continue to offset the impact of the buyback program," said Chip Hughey, managing director of fixed income at Truist Advisory Services.Finally, at 1 p.m. Eastern Time, the Treasury's new 5-year note auction came in weak, constituting the fifth and final — and the most sharply market-moving — whip of the day's bearish barrage. The Treasury sold $70 billion in 5-year notes, with the high yield unexpectedly reaching 5.033%, well above the 5.002% when-issued yield at the bidding deadline and also the highest since 2006.The bid-to-cover ratio was 2.21 times, below the average of 2.33 times over the previous six auctions. Primary dealers, which are obligated to purchase any unsold notes to prevent a failed auction, saw their allocation rise to 15.8%, the highest in two years. Analysts said the auction's yield came in far above trader expectations, and primary dealers were forced to take down an unusually large share, indicating a lack of interest from other potential buyers.With bond prices having fallen off a cliff earlier in the day, investors appeared to have lost all appetite to catch the falling knife. The dismal auction result further fueled panic selling, driving Treasury yields across maturities to surge uncontrollably once again.Wall Street ShakenLooking at the full-day move, this was the "most painful Waterloo" for the U.S. Treasury market in nearly 18 months.With benchmark yields soaring, corporate bond and mortgage costs came under widespread pressure, and major U.S. stock indices also fell, though the decline was relatively contained compared with the turmoil in bonds. By the close, the S&P 500 fell 0.8%, the Nasdaq Composite dropped 1.1%, and the Dow Jones Industrial Average slipped 0.7%."Risk assets have shown reasonably good resilience against this storm," said Scott Kimball, chief investment officer of fixed income at Loop Capital Asset Management. "At the end of the day, this is still a systemic crisis deeply entrenched within the rates market."However, Sean Simko, head of fixed income investment at SEI Investments, said bluntly: "No one wants to stand in front of a speeding train today. The bond market is facing a classic 'triple whammy' — stronger-than-expected macro data, massive supply pushing 5-year yields to multi-year extremes, and the consensus that global inflation remains stubborn."Rate pricing shows that interest rate swap contracts have fully priced in a cumulative 75 basis points of hikes over the next year, with significant funds hedging the tail risk of a fourth hike — if realized, the Fed's policy target range would be pushed to 4.75%–5.00%."Tightening pressures at the short end of the yield curve are accelerating," said Christophe Boucher, chief investment officer at ABN AMRO Investment Solutions. He believes today's economic data provides ample ammunition for the Fed to "keep doubling down" on its hawkish stance.Macro strategist Alyce Andres astutely noted that today's bond market rout was not purely driven by inflation panic; its essence lies more in a violent repricing of real rates and extremely weak demand for duration assets.Approximately 80% to 85% of the full-day selling momentum came from rising real rates: the 10-year nominal yield rose about 15 basis points, the 10-year Treasury Inflation-Protected Securities (TIPS) yield climbed 12.5 basis points, and the breakeven inflation rate ticked up 2 basis points.This means bond investors are pricing in a combination of the following factors: a "higher for longer" Fed hiking cycle; stronger U.S. real economic growth; a higher neutral rate; higher real term premiums or duration compensation; and more ample supply alongside tighter global financial conditions.Goldman Sachs strategist Rich Privorotsky broadly agreed on the growth side: "To me, this increasingly looks like a reflection of strong growth expectations (6% fiscal deficit + $1.5 trillion in spending = a lot of money printing and nominal growth)."This also remains one of the clearest macro risks facing the equity market today — the core issue is not inflation becoming unanchored, but rather that the real economy must endure persistently high real funding costs. As real rates are violently repriced, the anchor for global asset pricing has already shifted."Higher for longer" may no longer be just a hawkish slogan — it is evolving into a harsh new normal that markets must confront. As the real economy and financial system gradually adapt to a prolonged period of high capital costs, the alarm first sounded by the bond market may only be the opening act of a new round of deleveraging and valuation restructuring.Reposted from Cailianshe
2026-09-24 -
View detailsAI Disruption Again! How Powerful is Muse: These Sectors Suffered on US Stocks Last Night
In ancient Greek mythology, the Muses were nine goddesses of the arts and sciences. They entertained the gods with song and dance and inspired poets through their singing. Their image gradually became a metaphor for disciplines or virtues. At the same time, however, the Muses also had a "mad" side in many texts. Because they were once dominated by Dionysus, the god of wine, their original personalities were often depicted as frenzied delinquent girls who were prone to tearing people apart...Now, Meta's latest AI agent named Muse seems to have a similar dual impact on the U.S. stock market. On the one hand, the rapid rise of this "world's first personal AI assistant for everyone" as defined by Meta has indeed further ignited the AI rally in U.S. stocks. On the other hand, it also tore apart some sectors of the U.S. stock market on Tuesday.Market data showed that on Tuesday, shares of major European and American banks, insurance companies and online travel platforms generally fell. Investors are increasingly worried that personal AI agents launched by tech giants such as Meta are disrupting business models that profit from "consumer inertia" — that is, companies that maintain their moats largely by relying on "users who find it troublesome to switch or are too lazy to shop around."The S&P 500 financial index fell as much as 2.4% on Tuesday, hitting its lowest level since July, underperforming the broadly flat broader market. Bank stocks including JPMorgan Chase, Morgan Stanley and Wells Fargo all fell more than 2.5%. Insurer Allstate and brokerage Charles Schwab both dropped more than 5%.Companies that help users book business travel and accommodation were also hit, with Expedia Group down 3.7% and Booking Holdings down 3.9%. In Europe, the telecom sector was the worst-performing sector in the benchmark Euro Stoxx 600 index, with French telecom operator Orange SA and British telecom operator BT Group Plc each falling about 4%. Gym chain Planet Fitness fell as much as 11% at one point.Muse "Wreaks Havoc"The direct trigger for this round of selling was that Meta's newly released AI agent Muse topped the U.S. App Store chart on Apple. The app deeply integrates with third-party services such as Gmail and OpenTable, and can fully autonomously handle various digital operations on behalf of users. Boosted by Muse's explosive popularity, Meta's own stock surged 11% on Monday.Goldman Sachs' trading team pointed out in a research report that as AI assistants such as Muse and Instinct become increasingly capable in automatic price comparison, itinerary planning and booking, and even dealing with customer service on behalf of users, industries that rely on automatic renewal billing cycles, information asymmetry premiums, and cumbersome add-on sales are facing unprecedented pressure."For such companies, the impact of Muse is undoubtedly a real negative," said Rhys Williams, chief strategist at Wayve Capital Management. "People may still think it's a novelty right now, but I believe that two years from now, everyone will have their own AI agent."Goldman Sachs noted that if AI agents make it easier and cheaper for users to switch service providers, then telecom, insurance and utilities are industries worth watching. Its list of "consumer inertia" stocks facing disruption risk includes:Telecom operators AT&T and T-Mobile US; insurers Allstate and Progressive; streaming service providers Netflix and Paramount Skydance; and travel booking sites Expedia and Booking, among others.Think tank analysts Mandeep Singh and William Tong noted in a report that personal AI assistants could also divert customers away from established online platforms owned by companies such as Uber. In their view, Muse and Instinct will transform into a new type of "toll booth," directly taking a commission from every aggregated transaction initiated through AI.The threat to financial institutions is not limited to the potential for AI to replace some human advisers and their fees. In the view of Devin Ryan, head of financial services and fintech research at Citizens, AI agents could ultimately help clients perform tasks such as tax-loss harvesting more efficiently, reducing the idle cash held by brokers and other institutions, making it harder to convert that cash into their own profits."If an agent is optimizing 24/7," Ryan added, "does that remove the potential idle cash in the system?" AI Disruption Narrative Sweeps Wall Street AgainTuesday's sell-off clearly reminded many market participants of the crash suffered by software-as-a-service (SaaS) companies earlier this year, when Anthropic launched AI agent tools such as Claude Cowork.Independent research firm Citrini Research triggered a valuation collapse in food delivery, payments and software sectors in February with a bearish research report. On Monday evening, the firm again stated on social platform X that the public is beginning to rethink those companies that specifically profit from "creating transaction friction":"Tomorrow, you may see things that make you wonder: how much money do health insurers actually make just because people won't wait five hours on the phone to fight for a claim approval," the firm wrote on platform X. "When consumer behavior is no longer governed by human psychology, strategies that once worked will gradually become obsolete."Devin Ryan, head of financial services and fintech research at Citizens, said it was not any single AI agent that disrupted the industry overnight. But the release of a series of such products in recent months "has allowed a narrative to spread that the world is changing, and with it, uncertainty is increasing."In the eyes of some analysts, Muse's destructive power is far beyond that of previous AI tools: it has already connected the underlying ecosystems of PayPal and Plaid, the fintech infrastructure unicorn, and has huge potential to comprehensively reshape daily consumer payments, wealth planning, insurance claims, and even the underlying logic of financial operations.Of course, some investors and financial advisers also warned that once traditional financial giants catch up with the pace of technological change, Wall Street's current disruption reaction to Muse could eventually reverse."Turning a giant ship around is never a one-day task," said Alois Pirker, founder of wealth management consultancy Pirker Partners. "But for these established institutions, this is actually a huge leap opportunity. After all, the core asset — massive amounts of underlying users and transaction data — has always been in their hands."Last week, Anthropic launched a Claude workflow solution that can integrate with platforms operated by institutions such as Charles Schwab and Vanguard. "As long as Charles Schwab can serve financial advisors by making them more efficient in providing advice and raising assets, it will ultimately benefit the company through custody, client engagement, and other means," wrote Macrae Sykes, portfolio manager at Gabelli Funds.Reprinted from Cailian Press
2026-09-23 -
View detailsThe Hidden Worry Behind the Stock Market's Sprint to New Highs: A Sight Not Seen This Century...
By any measure, US stocks delivered a dazzling performance on Monday. The Nasdaq Composite surged 2% to a fresh record high; the broader S&P 500 also jumped about 1.5%, sitting less than 1% below its all-time peak. Yet beneath this seemingly buoyant market surface, traders are buzzing about an anomalous pattern tinged with concern: On Monday, more S&P 500 stocks hit 52-week lows than hit 52-week highs. Specifically, 30 index constituents touched new lows, while a mere 7 climbed to new highs. Jason Goepfert, founder of SentimenTrader and advisor at NextGen News, pointed out that the last time the S&P 500 rose at least 1%, traded within 1% of its 52-week high, and had more new lows than new highs was on December 21, 1999 — just a few months before the peak of the dot-com bubble. He added in a post on social platform X that the only prior instance of such a divergence in US stock market history was on July 23, 1929. In the view of Art Hogan, chief market strategist at B. Riley Wealth, the key issue in Monday's move is where the current leadership is actually coming from. The S&P 500's latest advance was led mainly by three sectors: communication services, information technology, and consumer discretionary. However, only information technology is currently within 1% of its 52-week high; communication services and consumer discretionary remain laggards, sitting 4% and 7% below their respective highs. "Leading stocks are currently fighting against the downward drag of sector rotation, while beaten-down names keep getting sold. As a result, in today's leadership pattern, it is much easier for stocks to slide to new lows than to break out to new highs," he said. Hogan further noted that if Middle East tensions continue to weigh on market sentiment, such structurally divided trading days could still occur sporadically in the coming months. "As long as hostilities persist, energy prices stay elevated, and the Federal Reserve is still forced to keep hiking rates, it will be very difficult for this market to truly reach a fresh high," he said bluntly. Meanwhile, in recent conversations with clients, Goldman Sachs flows expert Lee Coppersmith also noted that many investors appear increasingly uneasy about the current market. Although the broader market has shown resilience amid more hawkish policy pricing, persistent geopolitical uncertainty, and ongoing debates over the durability of the artificial intelligence trade, the difficulty of navigating day-to-day moves beneath the index has become plainly evident. Market breadth has become another fairly clear indicator that underlying action is far more difficult than the headline index suggests. Currently, fewer than 30% of S&P 500 constituents are trading above their 50-day moving average. Sentiment has also deteriorated. The Goldman Sachs Sentiment Indicator — a composite measure of US equity positioning — has fallen to -0.9, the lowest level in more than a year. In the end, the market has already digested a considerable amount of macro and micro news, both bullish and bearish. While the headline indices remain resilient, the alpha game beneath the surface — the hunt for excess returns — is becoming abruptly more difficult to play. Reprinted from Cailian Press
2026-09-22 -
View detailsUS Embassies in Multiple Middle East Countries Issue Security Alerts
Today (September 20), US embassies in Bahrain, Oman, the UAE, Saudi Arabia, Qatar, Kuwait, Jordan, Israel, Lebanon, Iraq and other countries issued security alerts, saying that given the tense situation in the Middle East, the current security environment remains complex and there is a risk of unpredictable escalation. US citizens currently in the Middle East should remain highly vigilant and be aware of possible flight cancellations, airspace closures and travel disruptions. US citizens outside the Middle East should carefully reconsider travel to or through the region. The security alerts all mentioned the recent conflict between Yemen's Houthi rebels and Saudi Arabia, saying the military conflict could escalate rapidly, and US citizens traveling to and from the region should closely monitor the latest information on airport and airline operations. The security alerts said US diplomatic facilities, including those outside the Middle East, have been targeted for attacks. Iran and Iran-backed groups may target other US overseas interests, or locations linked to the US and Americans worldwide, including US businesses and other institutions. Reprinted from Cailianshe
2026-09-20 -
View detailsOpenAI's Newly Reported Model Overstepping Behavior Sparks Concerns? Microsoft AI Head: The Situation Is Quite Serious!
This Wednesday, OpenAI reported that in the past six months, in addition to the "Hugging Face incident" (referred to domestically as "Bao Bao Lian"), the company also discovered six cases of "unexpected or concerning model behavior." Mustafa Suleyman, Microsoft's head of AI, issued a warning about this on Friday.Suleyman pointed out that AI models need to remain aligned with human interests at all times.In his latest interview, he said, "OpenAI released a new safety incident report containing evidence that AI's chain of thought (i.e., its working memory) is being tampered with by the AI itself, and modified to leave messages for future versions of itself. We don't yet know the reason behind it, but this is indeed a very serious situation.""This is also a very concrete example of just how powerful these systems are becoming," he added.In its announcement on Wednesday, OpenAI pointed out that the two major "overstepping" incidents involved: an unreleased research model and a training version of GPT-5.6 Sol, which inserted instructions into chat window summaries for their future versions, "to cover up errors or behavioral deviations and avoid user detection." Another incident involved an internal-only model that used a leaked API key without authorization and fabricated data.In addition, there were two examples involving models and agents communicating with each other through unauthorized message boards and file sharing, while the final case included two training examples in which models uploaded files to the internet in order to cite them as relevant answers to human evaluators.Suleyman also mentioned the earlier "Hugging Face incident," calling it "extraordinary," and said it prompted leaders in the AI field to say "it's time to take a serious look at this issue.""I don't think this is alarmism, nor do I think it's self-serving," he told the media. "I actually think this is the responsible thing to do, and I think the debate it has sparked is a healthy, open, public debate that we can have in a free society to discuss serious issues."Over the past two weeks, debate over AI safety and regulation has intensified. Previously, researchers warned that the technology poses a serious threat to humanity. Last weekend, Anthropic CEO Dario Amodei also joined the warning camp and wrote that the process of improving AI model capabilities should be slowed down. OpenAI CEO Sam Altman and Elon Musk both expressed support.However, US President Donald Trump pushed back, posting multiple times in recent days on his social media platform Truth Social, calling people's concerns about out-of-control AI a "scam" and fiercely attacking resistance to public data centers. Nvidia CEO Jensen Huang and Meta Platforms CEO Mark Zuckerberg also joined his camp."Regulation is not a disgusting, dangerous word," Suleyman said on Friday."Everything you currently trust and value is developed after careful consideration by standard-setting bodies involving industry, the public, consumer protection agencies, and Congress. We are just going through this process again. Right now everything is a bit chaotic because it's changing too fast, but this is just the next step in a normal process," he added.Reprinted from Cailian Press
2026-09-19 -
View detailsIs US Government Debt Restructuring Not Alarmist? Gundlach: Next Recession Will Trigger a US Debt Crisis
Jeffrey Gundlach, CEO of DoubleLine Capital and known as the "new bond king," warned on Thursday that the next U.S. economic recession could trigger a debt crisis and cause long-term Treasury yields to surge sharply—overturning the decades-old conventional view that Treasuries are always a safe haven during economic turmoil. Gundlach believes such a scenario could force the Federal Reserve and the U.S. Treasury to adopt unconventional policies, such as the central bank restarting "Operation Twist" (OT) to buy long-term bonds, or even restructuring the debt. Gundlach said he is currently focused on allocating to low-duration assets to protect DoubleLine's funds from further rises in interest rates. Will the next recession be catastrophic? "If a recession occurs, fiscal conditions will come under intense scrutiny, and the U.S. budget deficit could easily reach 12% of GDP. That could create $3 trillion in annual interest expenses, which is simply unaffordable," Gundlach said at an event in New York. Although Gundlach's view is extreme, it reflects investors' growing concern about the risk-diversification effectiveness of fixed-income assets—traditionally seen as a tool to cushion stock portfolio losses during recessions. In recent years, the inflationary nature of various shocks has dealt heavy blows to bonds, sometimes causing bonds and stocks to be sold off simultaneously. If the next recession is also accompanied by inflation, it would limit the central bank's room to stimulate the economy through rate cuts. Gundlach cited the widely watched breakdown of market correlations since 2020—including the comparison between the gold-copper ratio and Treasury yields—as evidence of a "new regime" in which the long-term trend for interest rates has turned upward. Meanwhile, he said the dollar and U.S. stocks have also stopped maintaining their previous negative correlation. "We are in a world where common sense is inverted—in the next recession, long-term interest rates will rise, driven precisely by the debt crisis that the recession itself creates," he said. Is restructuring U.S. Treasuries not unthinkable? Gundlach was a star bond manager at TCW for years, but left in 2009 after a dispute with the company, and subsequently founded DoubleLine Capital. As of March, DoubleLine managed $95 billion in assets and employed over 250 people. Gundlach said he is now "slightly less bearish" on long-term rates than a year ago, but still expects yields to ultimately rise. He believes that if the bond sell-off continues, U.S. authorities may step in with more forceful policy intervention to curb the selling. One possibility is restarting "Operation Twist," a policy operation in which the Fed sells short-term bonds and buys long-term bonds to lower long-term rates and ease future funding strains. "I think they will act when yields reach around 6.5%," he said, referring to the yield level that might trigger intervention. Another option is restructuring Treasuries—a risk Gundlach has previously warned about. This would involve cutting coupon payments on all outstanding bonds. Gundlach said the U.S. Treasury could simply default on its obligations: force every bond with a coupon above 1% down to 1%. That would cut interest expenses by 75% overnight. But the consequence is that all creditors would be thoroughly enraged, would never buy U.S. debt again, and the U.S. would no longer be able to borrow. Reprinted from Cailianshe
2026-09-18 -
View detailsWarsh Gets Serious! Market Pricing Suggests Three More Fed Hikes by Mid-2025
Wednesday, as the Federal Reserve concluded its September policy meeting with a hawkish rate hike, the bond market was signaling growing confidence that traders believe Fed Chair Kevin Warsh will deliver on his promise to curb inflation — which has now exceeded the central bank's target for five years. Pricing in interest-rate swap markets shows that after the Fed's first rate hike since 2023 and its projection of further tightening, traders have now priced in three more rate hikes by mid-next year — one more than before Wednesday's decision. This market pricing is notably more hawkish than the Fed's latest dot plot — the median projection in the updated dot plot implies one more hike this year and no changes next year. "The FOMC said this hike will help bring inflation down to 2% 'in a more timely manner,' which clearly indicates more work remains," said Luigi Buttiglione, CEO of advisory firm LB Macro. "We expect at least three more hikes." Swap market data suggests the next hike could come as early as next month. The repricing pushed two-year Treasury yields to their highest level since 2024 on Wednesday, reflecting market conviction that the Fed will cool the economy and crush inflation through substantial tightening. U.S. stocks also came under pressure, with the three major indexes falling for the seventh time in eight sessions. Although Warsh carefully avoided precommitting to future action, his blunt dissatisfaction with the inflation picture clearly conveyed the central bank's policy intent. This was a stark contrast to the post-meeting reaction in July — when the Fed held rates steady and Warsh's vague language on the anti-inflation path triggered a selloff in long-dated bonds. Priya Misra, portfolio manager at JPMorgan Asset Management, noted that the market's focus has shifted: after today, people are no longer questioning the Fed's credibility in fighting inflation, but are instead weighing the economic impact of the Fed's all-out push to bring inflation back to target. Market data showed that the two-year Treasury yield, most sensitive to rate expectations, jumped to 4.74% in New York overnight from 4.60% before the decision; long-dated yields, more sensitive to inflation, rose less, reflecting investor confidence that policymakers can control price pressures. Meanwhile, long-term inflation expectations fell notably. At the post-meeting press conference, Warsh reiterated his concerns about inflation, saying recent economic data "do not indicate a substantial improvement in the underlying trend." In the policy statement, the Fed also said the hike "will help bring inflation back to the Committee's 2% objective in a more timely manner." "This was a pivotal moment for Warsh to establish credibility," said Jeffrey Rosenberg, senior portfolio manager at BlackRock. "The market is treating him as a Fed chair with significantly enhanced credibility." Warsh Builds Credibility in One Move Facing five consecutive years of above-target inflation, traders had already priced in more than a 90% probability of a hike before Wednesday's decision. Industry data going back to 2008 shows that whenever rate-hike expectations reached such elevated levels, the Fed delivered a hike without exception. The latest wave of rate-hike expectations stemmed from Warsh's remarks last month, when he stressed that the Fed would ensure inflation cools at a "sufficiently rapid pace." Data released last week showed core CPI rose more than expected on a month-over-month basis in August, compounded by surging U.S. nonfarm payrolls and steady unemployment, firmly cementing rate-hike expectations amid hot inflation and robust employment momentum. "The Fed is essentially telling the market: the economy remains strong, the labor market stays tight, inflation is proving stickier, and the policy rate must stay higher for longer to restore price stability," said Daniel Siluk, portfolio manager at Janus Henderson Investors. Wednesday also saw a notable flattening of the yield curve as short- and long-dated Treasuries diverged, with the spread between two-year and 30-year yields narrowing to its lowest level since March 2025 in late trading. This extends the recent pattern of Fed decisions and Warsh's remarks repeatedly roiling the bond market. Since taking charge of the Fed in May, the three largest single-day moves in this key curve spread have all occurred after Warsh's public statements: twice at post-meeting press conferences in June and July, and once following his speech at the Fed's Jackson Hole symposium in Wyoming in August. To be sure, while the Fed quelled doubts about its anti-inflation resolve on Wednesday, it still needs to deliver further tightening if price pressures remain elevated. That is one reason why the market is now pricing more rate hikes next year than even the most hawkish officials project. Before Wednesday's Fed decision, 10-year and 30-year Treasury yields had already surged to their highest levels since 2007. This epic Treasury selloff was also part of a global rise in yields — since the U.S. and Israel struck Iran in February, disruption to Middle East energy supply chains has directly triggered a surge in international oil prices. Meanwhile, other forces were also pushing bond yields higher, such as companies aggressively issuing debt to fund their artificial intelligence ambitions. The flood of bond supply hit the market while also injecting additional stimulus into an already resilient U.S. economy. "Under the dual supply-demand shock, 'destroying demand' by raising rates is the only solution to curb inflation. Amid such severe headwinds, both stocks and bonds are unlikely to escape unscathed," said Luigi Buttiglione, CEO of macro advisory firm LB Macro. Source: Cailianshe
2026-09-17 -
View detailsTargeting $1.2 Trillion Valuation! OpenAI in Talks for New Funding, IPO Delayed but Cash Burn Continues
According to media reports citing sources familiar with the matter, ChatGPT developer OpenAI is in preliminary talks with investors about a new funding round that could value the company at $1.2 trillion. The potential fundraising comes as OpenAI's revenue growth accelerates following the successive releases of GPT-5.6 and the Astra model. The latest target valuation is a significant increase from March, when OpenAI raised $122 billion at a post-money valuation of $852 billion. Sources said the discussions with investors are still at an early stage, and the final valuation figure could change in the coming months. Any decision to proceed with the round will depend on the timing of OpenAI's eventual IPO. The sources also said the fundraising discussions were initiated by investors, not by OpenAI. OpenAI is seeking to capitalize on renewed demand for its products. After launching GPT-5.6 in July, the company released the Astra large model earlier this month. The launch of these new models reversed the relatively slow growth at the start of the year, accelerating the company's revenue growth. Sources said OpenAI "needs capital" because it has burned through tens of billions of dollars in recent years to train its models. The startup spent $34 billion last year but insists it has sufficient cash reserves after the March funding. Sources also revealed that with the release of GPT-5.6, OpenAI's annualized revenue run rate (ARR) surpassed $40 billion last month, up 20% month-over-month. The latest fundraising would pave the way for a long-awaited IPO. OpenAI CEO Sam Altman recently said the IPO is still in preparation but will not happen this year. He noted that going public now would be an "unwise time" amid growing concerns about the existential risks posed by AI. It is understood that OpenAI confidentially submitted its IPO prospectus in June this year but subsequently delayed its listing timetable. A new private fundraising round would give long-time backers such as SoftBank and Thrive Capital the opportunity to increase their stakes, but it also means these investors will have to wait longer to reap huge returns through an IPO. Meanwhile, this funding round would push OpenAI's valuation above that of its main rival Anthropic. Anthropic reached a valuation of $965 billion after its funding round in May this year, surpassing OpenAI and raising questions among investors about OpenAI's direction. Separately, media reported last week that Anthropic is on track to post adjusted profitability for a second consecutive quarter. The company is expected to go public as early as October, with a target valuation of around $2 trillion. Reprinted from Cailian Press
2026-09-16 -
View detailsRepeat of 2018 Selloff? Strategist Warns S&P 500 Could Fall 10% If Fed Hikes
Macro Risk Advisors LLC, a U.S. registered broker-dealer and independent macro derivatives research firm, warned that the Federal Reserve's likely rate hike this week could trigger a sharp pullback in the S&P 500, as falling profit margins hurt earnings outlook while the market prepares for a tightening cycle.Following last Friday's hotter-than-expected CPI report, traders almost fully priced in a 25-basis-point rate hike by the Fed this week, compared with about a 60% probability a week earlier.As of Monday's close, the benchmark S&P 500 has gained about 11% so far this year. Strong corporate earnings and a resilient economy have provided solid support for U.S. stock bulls.Since September, the S&P 500 has fallen nearly 1%, a month that historically has been the weakest for U.S. stocks. Lingering concerns over elevated energy costs and recent inflation data pushed the 10-year U.S. Treasury yield above 5% for the first time since 2023 on Monday, adding pressure to equities.Dean Curnutt, founder and CEO of Macro Risk Advisors, said that if the Fed delivers a rate hike on Wednesday, the stock market will face greater pressure."We expect the S&P 500 to pull back 8% to 10%, with a possible second leg lower in December," Curnutt wrote in a note to clients on Monday. He said a rate hike would "squeeze margins for companies that cannot pass on costs," while delivering a volatility shock to a market that is not prepared for it.Curnutt noted that the current market setup is quite similar to 2018, when the S&P 500 peaked in September and then fell a cumulative 10% in October and November. He warned that the "Santa Claus rally" did not materialize that year, and the market suffered another decline in December, eventually falling nearly 20% from its peak.Given that history, Curnutt believes that "taking a defensive stance right now is the right approach." Similar to 2018, he expects the market to move lower again in December in response to multiple rate hikes by the Fed in a "K-shaped, low-liquidity economy."However, historically, after the Fed starts a rate-hiking cycle, U.S. stocks may first weaken and then recover.Jeff Buchbinder, chief equity strategist at LPL Financial, noted in a recent report that across six rate-hike cycles since 1994, the S&P 500's average return was negative in the first four months after the first hike. But over 12 months after the start of a hiking cycle, the index averaged a return of nearly 7%, with a median return of about 11%.Although the Fed is poised to deliver its first rate hike in three years, several Wall Street professionals, including Goldman Sachs strategists, believe investors need not be overly concerned. Their reasons include strong U.S. corporate earnings growth, massive AI spending that could offset any cooling of optimism from rate hikes, and U.S. inflation appearing to slow, which should allow the Fed to act more gradually.Reprinted from Cailianshe
2026-09-15 -
View detailsRocketing Anthropic: Q2 Revenue Soars Nearly 15-Fold YoY, Confirms Nasdaq Listing
According to multiple media reports, the artificial intelligence unicorn Anthropic has chosen the Nasdaq exchange as its listing venue, preparing for its initial public offering, with the IPO scale expected to rank among the largest in history.On the eve of its IPO, Anthropic disclosed impressive performance results: its second-quarter revenue surged nearly 15-fold year over year, achieving profitability for the first time; and the third quarter is also expected to mark a second consecutive profitable quarter.Anthropic could go public as soon as next monthNasdaq has already handled several large U.S. IPOs this year, including SpaceX's $86.3 billion fundraising completed in June and SK Hynix's $26.5 billion listing in July. Anthropic choosing Nasdaq for its listing will be another major event for the exchange this year.Sources familiar with the matter revealed that the company plans to raise at least as much as SpaceX in this IPO, with the earliest listing date possibly in October 2026.Data aggregated by the media shows that the AI race has ignited enthusiasm in the IPO market; excluding blank-check companies and other financial vehicles, total U.S. IPO fundraising this year reached $160.6 billion, the highest annual level since 2021.It is worth noting that while Anthropic was advancing its IPO preparations, OpenAI CEO Sam Altman, Anthropic CEO Dario Amodei, and Elon Musk jointly spoke out, stating that AI technology risks are continuously rising and the pace of artificial intelligence development needs to slow down.Altman also clearly stated in an interview that, for safety reasons, OpenAI will not launch an IPO this year.Anthropic discloses strong performance dataOn the eve of its listing, Anthropic was the first to reveal its impressive performance — the company achieved what many AI companies have failed to accomplish for years: not only doubling revenue and achieving profitability, but also maintaining positive adjusted operating profit for two consecutive quarters.Preliminary data shows that Anthropic's second-quarter revenue exceeded $11.5 billion, surpassing the company's internal expectation of $10.9 billion. Its adjusted operating profit for the quarter reached $559 million, marking the company's first profitable quarter under that metric.In comparison, Anthropic's revenue in the second quarter of 2025 was only $787 million, with revenue scale growing nearly 15-fold in one year; revenue surged from $4.73 billion in the first quarter of 2026 to $11.5 billion in the second quarter, with an equally striking quarter-over-quarter increase.It should be noted that this profitability is adjusted operating profit, not net income under U.S. Generally Accepted Accounting Principles (GAAP). The adjusted measure typically excludes non-cash expenses such as stock-based compensation, and is not equivalent to traditional cash profitability. However, the turnaround to positive operating profit provides key support for Anthropic's IPO story.What's even more surprising to investors is that, according to foreign media citing multiple sources familiar with the matter, Anthropic has told shareholders that it expects to remain profitable in the third quarter. This would mark the company's second consecutive quarter of profitability as it prepares for its IPO.Sources familiar with the matter revealed that, excluding revenue-sharing payments to partners such as Amazon and the cost of training AI models, the artificial intelligence company's gross margin exceeds 80%.Based on the current business growth rate, Anthropic's annualized revenue is expected to exceed $65 billion, more than seven times its revenue level at the end of last year.From Cailianshe
2026-09-14