In the early hours of September 17 (Beijing time), the Federal Reserve raised its benchmark rate by 25 basis points, lifting the target range to 3.75%–4.00% — its first hike since July 2023, passed unanimously with a 12–0 vote. What truly unsettled markets, however, was not the hike itself but the stance of new Fed Chair Kevin Warsh: “Inflation is still too high and has persisted for too long.” After the decision, the Dow initially held flat, then sold off within half an hour, closing down 631 points (-1.21%), its lowest close since mid-June.

Markets were pricing in a more unsettling judgment: this is not a one-off correction but the start of a new tightening cycle. The median dot plot points to one more hike this year; swaps markets are even pricing in roughly three cumulative hikes by next September. The 10-year Treasury yield held above 5%, and the 30-year broke above 5.4% intraday, the highest since June 2007 — the world’s pricing anchor keeps moving up.

A notable divergence is emerging: on the day of the hike, the PHLX Semiconductor Index rose 1.07% and Intel gained 4.68%. The AI trade is shifting from “cloud-computing expectations” to “infrastructure deployment and earnings delivery” — companies with real orders are holding up, while those still telling stories are being abandoned. By this morning’s close (Beijing time), U.S. stocks rebounded across the board as oil prices fell, with the Nasdaq up 1.69%.

Risks are far from cleared: Middle East conflict persists, Brent has eased from above $105 to around $104 a barrel, and U.S. August CPI came in at 3.4% year-on-year, a three-year high. Whether the Fed can contain inflation driven by supply shocks — and at what cost — will be the biggest question for global markets in the months ahead.