Washed debut turns bullish, can the US stock AI bull market continue?

TL;DR

· The Federal Reserve keeps interest rates unchanged, but the dot plot shows a rising risk of rate hikes within the year.

· Waller did not submit a personal forecast and weakened traditional forward guidance; the market needs to adapt to a Fed with fewer commitments.

· Related underlyings: BTC, the Nasdaq, the S&P 500, the 2-year U.S. Treasury, DXY, and gold.

At its first FOMC meeting as chair, Waller kept the target range for the federal funds rate at 3.50%-3.75%, but after the meeting U.S. stocks fell and bond yields rose—risk assets’ reaction to this “hold steady” decision was not easy.

The oddity is that, even though the policy interest rate did not change, the market has begun to reprice the future path. The Fed’s package this time includes: rates unchanged, inflation forecasts revised upward, a hawkish shift in the dot plot, and Waller himself publicly stating that the statement removed the so-called forward guidance and that this kind of guidance is “inappropriate for the current policy environment.”

For investors, this is not a typical “hawkish hold.” If it were only the dot plot moving higher, markets could still trade probabilities around the next meeting. If it were only the new chair’s change in communication style, the impact might be limited. But this time, two things appeared at once: the committee’s collective projections lean more toward rate hikes, while the chair himself is unwilling to treat forecasts as guidance for the market.

Risk assets are not only facing the question of “whether there will be a rate hike this year.” The bigger change is that, in the past, markets have been used to receiving a roadmap from the Fed in advance—now, that roadmap itself is becoming increasingly blurred.

Rates unchanged, future path higher

According to the Fed statement, this FOMC meeting kept rates unchanged through a unanimous 12:0 decision. Standing alone, this result does not amount to tightening directly. What makes markets nervous is the subsequent Summary of Economic Projections (SEP)—especially the dot plot.

The dot plot can be understood as a vote-like expression of where each Fed official expects the future interest rate level to be. It is not a policy commitment, nor a formal decision, but markets use it to gauge the committee’s internal leanings. If more dots move higher, investors typically increase the probability of future rate hikes or the likelihood that high rates will be maintained for longer.

The June SEP shows that 18 participants submitted forecasts. Judging from the dot-plot range, 9 expect at least one more rate hike within the year, 8 expect roughly maintaining the current level, and 1 corresponds to a rate-cut scenario. By the end of 2026, the median federal funds rate rises to 3.8%, higher than 3.4% in the March SEP.

This is the reason behind the “bearishness even without a hike.” Markets are not trading the interest rate of that day; they are trading the tail risks over the coming months: if inflation continues not to fall, whether the Fed will put rate hikes back into the policy options.

Inflation forecasts also support this direction. In the June SEP, the median 2026 PCE inflation forecast is revised upward to 3.6%, and core PCE is revised upward to 3.3%; in March, both were 2.7%. PCE is the inflation measure preferred by the Fed. Core PCE excludes food and energy and better reflects underlying trend price pressure. When both are revised upward at the same time, it indicates the committee believes inflation will be stickier than previously expected.

The significance of this meeting for the market is not “rates remain unchanged,” but “the Fed acknowledges greater inflation pressure, and more officials see rate hikes being brought back into the scenario set.” Money that had been betting on easing needs to readjust its positions.

Dot plot turns hawkish, Waller doesn’t show his hand

The tension in this meeting comes from the coexistence of Waller’s personal choices and the FOMC’s collective projections.

On one side, the dot plot indicates a more hawkish view within the committee regarding inflation and the interest-rate path. On the other side, Waller himself did not submit a personal forecast, and in his opening remarks at the press conference he said the statement removed forward guidance because it is not suitable for the current policy environment. He also emphasized that policy needs to rely more on existing and real-time data sources.

Forward guidance is a communication tool that markets have become very familiar with over the past decade or more. Through statements, forecasts, and the wording used at press conferences, central banks tell the market in advance roughly how future policy will run, with the goal of stabilizing expectations and reducing disorderly swings in financial conditions. For traders, this is akin to the central bank laying the track in advance—before policy changes, the path is already roughly visible.

Waller’s debut sends the opposite signal. He did not scrap the dot plot, and he did not announce abandoning the forecasting framework—but he chose not to submit personal dot points and publicly weakened the market’s reliance on forward guidance. It is now harder for the market to interpret a particular median, a particular sentence, or a particular chart as a fixed route.

This does not conflict with the hawkish signal from the dot plot. The committee is more concerned about inflation now, but the chair also does not want the market to treat forecasts as commitments. The result is that investors must both digest a higher interest-rate path and adapt to less certainty in the outlook.

So, this meeting cannot simply be written up as “Waller is more hawkish than his predecessor.” A more accurate description is that Waller is trying to shift the Fed’s credibility away from “making advance commitments about what it will do in the future,” toward “adjusting at any time based on data.” This preserves policy flexibility, but the cost is that the market will find it harder to anchor the path in the short term in advance.

Less guidance, amplified data volatility

If the Fed offers fewer commitments, markets must bear more of the judgment cost themselves.

In the pricing of risk assets, Fed communication itself is a liquidity variable. It is not only rate cuts that can change asset prices; a clear easing path can also reduce volatility, encouraging funds to buy growth stocks, crypto assets, and long-duration assets earlier. Conversely, even if rates stay unchanged on the day, as long as the future path becomes more uncertain, the market will demand higher risk premia.

This is the asset implication of Waller’s communication shift. In the past, investors often treated the FOMC as a “find-the-answer” meeting: what words were removed from the statement, where the median sits on the dot plot, and whether the chair’s press conference remarks reassured the market. In the future, if Waller continues this style, the FOMC may become more like a data calibration point rather than an answer-delivery event.

Under this framework, the weights of inflation, employment, wages, and productivity data will all rise. Each piece of key data could directly change market pricing for the next meeting, because the chair will not provide too many protective explanations to the market in advance. “Data dependence,” which sounds neutral, means for trading a shorter path, faster feedback, and more direct volatility.

Waller announced the establishment of working groups covering five areas: communication, the balance sheet, data sources, productivity and employment, and the inflation framework. This also reinforces the signal. However, these working groups are currently better understood as a re-examination of the policy framework—not evidence that the Fed has entered an entirely new era of long-term high rates, and not evidence that the dot plot has been abolished.

BTC, Nasdaq, and gold trading have different variables

After the Fed meeting, different assets came under pressure, but that does not mean they are trading the same logic.

The commonality between Bitcoin and the Nasdaq is that both are sensitive to real interest rates and expectations for liquidity. When the market believes future policy rates may be higher, the dollar may strengthen, and yields on the short end may rise, high-volatility assets and long-duration growth assets are typically suppressed. According to market data, before the meeting Bitcoin had retreated from around $65,500, and after the meeting it briefly fell below $64,000; one of the important background factors is macro pressure.

However, Bitcoin’s decline cannot be attributed to the FOMC alone. The crypto market is also influenced by positioning, leverage, ETF capital flows, on-chain liquidity, and market sentiment. A more cautious way to put it is that hawkish Fed expectations and a stronger dollar added pressure to a risk appetite that was already sensitive.

The logic for the Nasdaq and the S&P 500 is more direct. Growth stocks’ valuations depend on discounting future cash flows; a higher interest-rate path raises the discount rate and lowers the market’s tolerance for valuing risk assets. According to AP, on June 17 the S&P 500 fell 1.2%, the Nasdaq fell 1.3%, and Treasury yields climbed as rate-hike expectations increased.

Gold has different variables. It does not generate cash flows, and it is usually sensitive to real interest rates and the dollar’s performance. When yields on the short end rise and the dollar strengthens, the opportunity cost of holding gold increases, putting downward pressure on gold prices. According to market data, after the meeting gold was down by about 2% intraday—more driven by trading expectations for real interest rates and a stronger dollar rather than purely by changes in risk appetite.

The dollar and short-end Treasury yields are on the other side. A higher probability of rate hikes within the year, upward revisions to inflation forecasts, and the chair’s reluctance to promise easing quickly—all support the dollar and short-end rates. The market is not trading rate hikes that have already happened; it is trading the idea that “the Fed is no longer easily endorsing easing expectations.”

Further to watch: whether Waller continues his style

After this meeting, the most important thing to observe is not the dot plot median itself, but whether future data will force the dot plot to move higher again.

If upcoming PCE and core PCE continue to come in above expectations, and the labor market shows no clear cooling, the tail risk of rate hikes implied by this dot plot will move closer to actual market pricing. At that point, market discussion will not be limited to “hawkish hold”—it will shift to whether actual rate hikes are being reintroduced into policy options.

If inflation falls back and employment weakens, Waller’s emphasis on data dependence will leave room for the Fed to pivot. The dot plot is not a promise—it can be revised as new data comes in. This also matters for risk assets: reducing forward guidance does not necessarily mean the Fed will keep high pressure on rates for the long term; instead, it means the market must follow incoming data to adjust expectations more quickly.

Another variable is whether Waller’s communication style will carry over into the next meeting. If he continues to avoid providing a clear path and continues to downplay traditional forward guidance, the market will have to accept a new normal: the Fed is no longer responsible for laying out each step in advance, and volatility will be more concentrated between data releases and meetings.

Next, what BTC, the Nasdaq, gold, and the dollar need to look at is not a reassuring statement, but whether inflation truly declines—and whether Waller will continue pushing forward this Fed stance of “fewer commitments.”

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