5 key takeaways from the “new” Fed
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Well, we got our answer.
Yesterday (Wednesday, June 17), about 9 hours prior to the first Fed rate decision under new chairman, Kevin Warsh, we asked the question ...
Answer: Yes.
Here’s how these major assets fared for the day (Wed, June 17):
SpaceX fell 5% (yesterday’s declines ended a 3-day winning run since its IPO on Friday, June 12th, trimming its gains since IPO to 42%. At the time of writing, SpaceX is holding around the $190 level in today's US pre-market)
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Gold (XAUUSD+) fell 1.7%, now attempting to stabilise below $4300 after a short-lived rebound
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NAS100 fell 1%, though futures are rebounding 1.4% at the time of writing today (Thur, June 18)
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Why did major assets (e.g. SpaceX, Gold, NAS100, etc.) fall yesterday?
ICYMI - as cited in our downside scenario in yesterday’s Market Pulse report:
“Major assets such as stocks (including SpaceX), indexes (e.g. NAS100), precious metals (e.g. Gold), and even cryptos (BTC, ETH, SOL etc.) could tumble if markets ramp up bets for a Fed rate hike in 2026.”
On Tuesday, June 16th, as the FOMC kicked off their 2-day policy meeting: Markets predicted an 84% chance of ONE Fed rate hike by end-2026.
Today (Thursday, June 18th): Markets now fully expect (100% odds) at least one Fed rate hike in 2026, with a further 44% chance of a SECOND Fed rate hike before the year is over.
Markets shifted their expectations after some key new insights out of the Federal Reserve, following Kevin Warsh’s first press conference and FOMC policy meeting as Fed Chair.
And here’s why:
5 Key Takeaways from June 2026 Fed policy meeting
1) Higher Rates
To be certain, the 19 officials on the FOMC (Federal Open Market Committee) voted unanimously to hold its benchmark interest rate steady at 3.5%–3.75% this week.
But in terms of their next moves:
Fed Chair Warsh abstained from submitting a forecast on Fed rates.
About half (9) of those Fed officials penciled in at least one rate hike before year-end!
The remaining half (other 9 officials) instead saw Fed rates remaining at current levels or perhaps even moving lower in 2H26.
Still, that was enough for markets to take this as a “hawkish” signal (expect US interest rates will go up).
NOTE: The prospects of US interest rates moving higher tends to boost the US dollar, while dragging down other major assets such as G10 currency pairs (e.g. EURUSD+, GBPUSD+), stock indices (e.g. SP500, NAS100), precious metals (Gold, Silver), and even cryptos.
And vice versa.
2) Inflation Focus
New Fed Chair Kevin Warsh opened his press conference, which began at 6:30 PM UTC yesterday (Wed, June. 17) vowing to restore price stability.
The Fed has one primary tool for keeping US inflation under control = raise interest rates.
Such an overt commitment prompted markets to fully expect at least one Fed rate hike, which dragged down major asset prices in real time yesterday.
3) Communications Change
Warsh shortened the post-meeting statement by more than half, and even skipped submitting his own rate forecast in the Fed “dot plot”.
If this is the standard for Fed communication moving forward, markets may react with more volatility to incoming US economic data, in the absence of “forward guidance” from the Fed.
4) Task Force
Chair Warsh also announced that 5 task forces will be launched to review and potentially overhaul how the Fed operates, including how it gathers and interprets data.
The recommendations from these task forces are expected by end-2026.
5) Markets Rattled
On Wednesday, 2-year Treasury yields jumped 13 basis points - the biggest single-day Fed meeting move since April 2025 - as traders ramped up bets on near-term rate hikes.
The US dollar rose, while US stock indices (e.g. SP500, NAS100), precious metals (Gold, Silver), major FX pairs (e.g. EURUSD+, GBPUSD+), and even cryptos were dragged lower.
Such price action confirmed what we’d expected in the Market Pulse report published prior to the Fed’s latest policy announcement and Chair Warsh’s press conference.
How might major assets perform under a “hawkish” Fed in 2H26?
With the new Fed boss firmly focused on getting US inflation under control, that could mean US interest rates going higher.
Such prospects could in turn translate into:
Stronger: US dollar
Weaker: Gold, cryptos
Still resilient?: US stock indices may still punch higher, assuming the fervour for AI stocks persists.
GBPUSD+ respects downside target set earlier this week
GBPUSD+ was listed among this week’s “3 Assets to Watch” (June 15-19) - as published last Monday, June 15th.
In that report published at the onset of the week, we asked the question:
“GBPUSD+ to revisit 1-month lows?”
ANSWER: Also, yes.
This major currency pair, among the top most-traded in the world, duly sank on the stronger US dollar following the Fed’s latest hawkish signals.
GBPUSD+ closed yesterday (Wed, June 17) around the psychological 1.3300 level - the downside target we had drawn since Monday, June 15th.
NOTE:
Stronger US dollar and/or weaker British Pound = GBPUSD+ moves lower
Weaker US dollar and/or stronger British Pound = GBPUSD+ moves higher
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As things stand, the British Pound is the 2nd biggest loser against the US dollar so far this week (GBPUSD+ falling 1.45% week-to-date).
(1st place: Norwegian Krone which weakened on falling oil prices).
Today (Thursday, June 18), GBPUSD+ is sinking lower after the Bank of England (BoE) voted 7-2 to leave its rates unchanged - as widely expected.
The 2 votes called for higher rates, though were clearly outnumbered.
The BoE also lowered its forecasts for peak UK inflation from 3.6% now down to 3.25% - which suggests that policymakers may not need to work as hard to subdue price pressures.
The signals above prompted markets to lower bets for BoE rate hikes this year, though still fully expect a hike by November 2026.
NOTE: A currency tends to weaken at the thought of its country's interest rates falling/not rising as fast as its peers.
But wait, there's more!
Also today, UK voters in Makerfield will have their say on whether Andy Burnham should be in parliament, and potentially becoming the Labour Party’s leader, and perhaps even replace Keir Starmer as UK Prime Minister.
In short, GBPUSD may see further declines in the months ahead on:
Rising and persistent UK political uncertainty
Bank of England that’s in no rush to hike UK rates (let’s see what they say later today)
US Federal Reserve that’s inclined to hike US rates to keep inflation under control
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DISCLAIMER:
This article is provided for general information and reflects the author’s views only. It does not constitute investment advice, nor an offer or solicitation to buy or sell any financial instruments or digital assets. Your ability to access or use any products or services mentioned may be subject to the laws and regulatory requirements of your jurisdiction.