The Federal Reserve officially enters the "Wash Era," and market rate hike expectations are heating up

robot
Abstract generation in progress

BlockBeats News, May 23rd, Eastern Time May 22nd, the three major U.S. stock indices closed higher collectively, with the Dow Jones rising 0.58% to hit a new all-time high, the S&P 500 index rising for the 8th consecutive week, and the Nasdaq up 0.19%. Chip stocks and quantum computing concept stocks surged across the board, with the Philadelphia Semiconductor Index rising nearly 2%, reaching a new high.

Among them, Qualcomm surged over 11%, Credo Technology and Skyworks Solutions rose over 12%; in the quantum computing sector, Rigetti Computing increased over 19%, D-Wave Quantum up over 14%, and IonQ up over 8%.

Market risk appetite has rebounded, mainly driven by expectations of easing tensions in the Middle East. Reports indicate that Qatar has dispatched a negotiation team to Tehran to assist in pushing the U.S. and Iran toward an agreement; Pakistan’s Army Chief Munir also arrived in Iran to participate in mediation. Former President Trump stated that Iran "will never have nuclear weapons," and said "this matter will be resolved soon."

Meanwhile, U.S. President Trump convened a high-level national security team to discuss Iran issues on the same day. Sources say that if negotiations fail to make breakthroughs, the U.S. is seriously considering launching a new military strike against Iran.

Signs of easing also appeared in the Strait of Hormuz situation. U.S. officials said there is currently no evidence of Iran laying mines, nor have commercial ships encountered explosions. As risk aversion sentiment cooled, U.S. Treasury yields retreated, and international oil prices surged then retraced gains.

Additionally, Kevin Warsh was officially sworn in as Federal Reserve Chair, marking the beginning of the "Warsh era" at the Fed. Warsh stated he would lead a "reform-oriented" Federal Reserve and emphasized fulfilling the responsibilities of controlling inflation and achieving full employment with "independence, clear judgment, and a firm stance."

Trump said at the ceremony that he hopes Warsh will become a "completely independent" chair, but also emphasized "not to harm economic prosperity while controlling inflation."

With Warsh’s appointment and recent rising inflation expectations, market bets on further tightening by the Federal Reserve have significantly increased. CME’s "FedWatch" data shows that traders now estimate nearly a 70% chance of the Fed raising interest rates again within 2026, whereas earlier in the year, the market generally expected a rate cut cycle.

View Original
This page may contain third-party content, which is provided for information purposes only (not representations/warranties) and should not be considered as an endorsement of its views by Gate, nor as financial or professional advice. See Disclaimer for details.
  • Reward
  • 10
  • 1
  • Share
Comment
Add a comment
Add a comment
ChecksumSmile
· 5h ago
Federal Reserve independence reform, in plain language, means continuing the hawkish stance
View OriginalReply0
On-ChainCheatSheetKing
· 6h ago
Did the Dow hit a new all-time high, but are retail investors making money?
View OriginalReply0
MempoolMaggie
· 8h ago
The Strait of Hormuz is stable, and falling oil prices are positive for inflation.
View OriginalReply0
Pragmatists
· 8h ago
Chip stocks lead the gains again; the semiconductor cycle has truly returned.
View OriginalReply0
CoralSlippage
· 8h ago
U.S. debt volatility decreases, funds are starting to risk on.
View OriginalReply0
TransparentDome
· 8h ago
Wosh immediately talked about interest rate hikes upon taking office; there's a 70% chance it's a bit aggressive in 2026.
View OriginalReply0
RugproofGrandma
· 8h ago
Easing tensions in the Middle East is a good thing, but can we trust the Iran negotiations?
View OriginalReply0
FoldedCosmosCat
· 8h ago
8 weeks of continuous gains, how much longer can this bull market last?
View OriginalReply0
HeavyStakingOnASnowyNight
· 8h ago
The Dow Jones Industrial Average has hit a new high, but my position is still trapped in a loss.
View OriginalReply0
TheFeelingOfEthInTheSeaBreeze
· 8h ago
Philadelphia Semiconductor Index hits new high, driven by AI computing power demand
View OriginalReply0
View More
  • Pinned