Late at night, two rounds of selloff—the Fed has made its position clear

——When the market most needs reassurance, the Federal Reserve reminds everyone: if inflation doesn’t cooperate, the central bank won’t step in to save the day.

All of the key indicators we watched on Monday broke down across the board:

Oil prices surged sharply: U.S. crude pushed well above $75, closing at $78;

Gold prices fell sharply, dipping below $4,000 at one point during the day;

U.S. stocks fell across the board: the Dow Jones fell 0.26%, the S&P 500 fell 0.79%, and the Nasdaq fell 1.55%;

Meanwhile, the U.S. Dollar Index climbed above 101, and the 10-year Treasury yield rose above 4.60%.

Crude oil, the dollar, and Treasury yields all moved up to dangerous levels, putting pressure on other markets. Compared with gold’s decline, U.S. equities look relatively restrained.

There were many bearish events yesterday, such as the U.S. launching attacks on Iran for three consecutive days, and the South Korean stock market crashing—but what concerns us most is a line from the Fed:

Fed Governor Waller (the standard-bearer for the traditional dovish/neutral camp) said: “If core inflation coming out this week is hot again, then the FOMC will need to consider tightening monetary policy in the near term.”

First, Waller’s comments came at around 00:00 Beijing time, when the market was still selling off. The Fed not only didn’t prop up markets, but instead triggered a second leg down—something you can clearly see from gold’s intraday action. One leg was driven by oil prices, and the other leg was driven by Waller’s remarks.

Second, based on the remarks themselves, this is the most hawkish signal the Fed has sent so far this year—though it was conditioned, the words “rate hikes in the near term” are especially jarring, with a sense of urgency. The probability of a 25 basis point rate hike in July has already risen to 50%.

In the past few weeks, the market could still comfort itself by saying: “Oil price gains are a temporary geopolitical shock; as long as core inflation (excluding energy and food) holds steady, the Fed won’t make any rash moves.” But this time, Waller directly stated: “We can no longer blame inflation on the tariffs and the surge in oil prices from before.”

Third, the timing of Waller’s remarks was set for the day before this week’s inflation data release (forcing interference with inflation expectations). By convention, Fed officials usually stay low-key before CPI data is released. Wall Street’s overall expectation is that headline inflation will cool somewhat (with the year-over-year rise expected to fall from 4.8% to 4.2%), while core inflation remains unchanged (expected to stay at 2.9%). That was supposed to be good news—but what Waller emphasized was core inflation.

What really happened yesterday wasn’t that the market suddenly feared war—it was that the market started trading at the same time “high oil prices, high inflation, and a more hawkish Fed.” Today’s CPI matters because it can dismantle the “near-term rate hikes” framework that Waller has just built.

Risk warning: This article is based only on publicly available information and market data for analysis and exchange purposes; it does not constitute any investment advice or any promise of returns. Financial markets involve risk, and investment decisions should be made independently based on one’s own circumstances.