Global Market Review: Fed Hikes Rates, Yield Curves Flatten, and Central Bank Eyes Turn to BoE and BOJ

Thursday, September 17, 2026 | Daily briefing on Warsh’s surprise Fed hike, bear-flattening yield curves, Omani oil detours, and Bitcoin’s defense of the 75k threshold.

Daily Summary

Our View: We interpret the new equilibrium formed after the Fed in favor of the dollar: short-term yields rising while long-term yields decline signals confidence in the fight against inflation and keeps the dollar index above 100. Today marks the second leg of central bank days; we expect the BoE to keep rates on hold with a split vote, and sterling to recover if hints of a November hike emerge. We expect a cautious recovery in risk assets, a easing in oil to the 103–107 band driven by cargoes routed through Oman, a bottom-seeking phase for gold around 4,300, and bitcoin to retest 80,000 as long as the 75,000 support holds. It is normal for yen positions to lighten ahead of tomorrow’s BOJ decision.

The Fed delivered its first rate hike in over three years and signaled more to come. The policy rate is set at 3.75–4.00%; the decision was unanimous, with 16 out of 18 members expecting at least one more hike by year-end. Goldman has flipped back to an October hike, with futures pricing in a 50% chance for October and 90% by year-end.

Warsh: Inflation remains far too high, and this hike merely removed a dose of accommodation. In other words, policy is not yet restrictive. He gave no forward guidance, stating he will not fixate on a single data point.

The yield curve experienced a bear flattening. The 2-year yield rose to 4.71%, its highest since July 2024; the 10-year sits just below 5%, while the 30-year dropped from a 19-year high to 5.33%. According to ING, the next target for the 10-year is 5.25%.

The dollar hit a seven-week high at 100.33. The euro touched a seven-week low at 1.1456, sterling rests at 1.3377, and the yen hit a two-week low of 156.20. The BoE is expected to hold rates steady today, while the BOJ is set to raise rates to a 31-year high tomorrow.

Oil pulled back following Omani cargo shipments. Brent sits at 105.7 and WTI at 102.1; they fell 2.7% and 3.2% respectively on Wednesday. Saudi Arabia is offering additional crude loadings to Asian refiners via ship-to-ship transfers off the coast of Sohar port. DBS sees $85–95 in its baseline scenario and $120 in its pessimistic scenario.

Wall Street reversed post-Fed, while Asia rebounded today. The Dow fell 1.21% to 51,462, the S&P 500 lost 0.44%, and the Nasdaq closed flat as the chip index gained 0.6%. Energy was the weakest sector, down 3%. Nasdaq futures are currently up 0.6–0.7%.

Bitcoin trades at 76,450, and Zcash surged 23%. Paradigm founder Huang disclosed a ZEC position. ETF outflows continue: $450 million on Sept 15 and $152 million on Sept 16. The 75,000 zone has turned into a critical threshold.

The BIST 100 dropped 5.5%. The index fell to 13,123, recording a 9.5% weekly loss, with its RSI in oversold territory at 29 and breaking below its 200-day moving average—an unprecedented move in the global landscape.

Story of the Day

The man brought in to cut rates just hiked them

Kevin Warsh, handpicked by Trump to lower rates, delivered the Fed’s first rate hike in over three years on Wednesday in total harmony with his colleagues, achieving a unanimous vote. The policy rate was raised by a quarter-point to the 3.75–4.00% range. This united front was likely designed to signal to markets that the central bank retains the upper hand both over inflation and its own independence. The policy statement notes that additional tightening in the near future is likely and that the goal is to bring inflation down sooner; the dot plot shows 16 out of 18 members projecting at least one more quarter-point hike by year-end, with the median projection keeping the policy rate at 4.1% at the end of both 2026 and 2027.

In his press conference, Warsh stated that the economy has strengthened since the last meeting, but no notable improvement has been seen in the inflation trend, delivering the key sentence: Inflation remains too high, and this hike merely removed a dose of accommodation. In short, policy is still not considered restrictive, meaning more could follow. Ryan Detrick of Carson Group summarizes it aptly: The Fed appears united in the fight against inflation, and the good news is that the committee does not believe multiple hikes in the coming months will overly damage an otherwise solid economy; on the flip side, inflation has been above the 2% target for five years.

Warsh once again provided no forward guidance and stated he would not get bogged down by a single data point, but the market drew its own conclusions. Reuters’ analogy stands out as the most memorable line of the morning: Rate hikes are like cockroaches; if you see one, there are likely more hiding behind the wall.Although the dot plot outlines only one more hike for this year, futures are pricing in three more; the probability for October is slightly above 50%, and for a hike by year-end, it is 90%. Goldman Sachs wasted no time flipping back to an October call, justifying it thus: It is most natural for the FOMC to deliver hikes in consecutive meetings to support a more timely return to the 2% target; further hikes are possible, though not their baseline scenario. This is a 180-degree turnaround from the bank’s previous expectation of a pause following a September hike.

The market reaction highlights where pricing has shifted: short-term yields spiked, with the 2-year overnight yield rising 6 bps to its highest level since July 2024, holding at 4.71%, while the dollar surged to a seven-week high.

The truly interesting part occurred at the long end of the curve. The 10-year yield caught its breath just below 5%, while the 30-year fell 2 bps to 5.33%, retreating from its 19-year high of 5.401%. Padhraic Garvey of ING interprets this as good news for Warsh: the breakdown in the 10-year yield shows a measured decline in inflation expectations, meaning the market endorses the hike as an anti-inflation move. However, while Garvey likes the performance, he limits the outcome: this will not rescue the back end of the curve, and the next target for the 10-year remains 5.25%.

A Deutsche Bank investor survey published Monday established the same logic beforehand: a hike pushes short-term yields slightly higher in the short run, but if the Fed had held steady, long-term yields would have risen even more. In other words, by rediscovering its anti-inflation religion, the Fed gave long-term bonds some breathing room—how long that lasts is another matter. Reuters’ framing this morning ties this to a general regime description: the world is adapting to a recurring supply-shock era where inflation runs hotter than central banks want, and interest rates run higher than investors calculate.

Turn of the other central banks

The Fed’s move amplifies pressure on every other central bank, starting with the Bank of England meeting today. The market expects rates to remain on hold, but the committee is likely to remain divided, and every word will be weighed for hawkish hints that high energy prices could force their hand in November. Tomorrow, the Bank of Japan is almost certainly set to hike rates; expectations center on a move to a 31-year high and signals of readiness to continue raising borrowing costs.

OCBC notes that the real question is not the decision itself, but how Ueda frames the period beyond September, specifically whether faster normalization will be signaled while inflation remains high. This is the key test for the yen: the currency surged to a seven-year high against the dollar last week as speculative positions flipped net long on growing conviction in the BOJ’s tightening path. Japanese retail investors, however, are maintaining stubborn short positions, expecting recent yen gains to be short-lived. In the broader picture, the market assumes that by year-end, the central banks of the US, Europe, UK, Australia, and New Zealand will all be forced to re-tighten policy.

Will the Fed be forced to buy bonds?

As rising yields drive up credit costs across the US economy, a question has emerged: Can the Fed be called upon to buy government bonds if the Treasury’s buyback campaign fails to yield results? Treasury Secretary Bessent’s buyback operations expanded last week have failed to work, with the 10-year crossing above 5% to hit its highest level since 2007; Bessent brushed the movement off as “global matters.” Fed watchers consider such intervention unlikely unless the market faces genuine distress, and so far, there are no signs of distress.

Rick Rieder of BlackRock notes that financial conditions represent one of the Fed’s unwritten mandates and must be factored into decisions; if the Treasury faces severe difficulty selling debt or other market disruptions occur, the Fed could be pulled in to calm conditions, making the performance of upcoming auctions worth watching. However, most analysts view large-scale Treasury buying to cap yields as an impossibility for the Fed. Lou Crandall of Wrightson ICAP’s reasoning is direct: Warsh values the Fed’s and his own credibility immensely; the Treasury has damaged its own credibility through market interventions, and Warsh will not want the Fed dragged into that, as the stakes for the Fed are even higher than for the Treasury.

Mark Sobel of OMFIF acknowledges that the administration could push the Fed toward a form of quantitative easing or yield curve control—meaning cheap budget financing and fiscal dominance—but believes Warsh will resist. Three structural hurdles remain: such buying would shatter the pillar of independence established by the 1951 Treasury-Fed Accord, directly contradict the effort to drive inflation down to 2%, and expand the $6.7 trillion balance sheet that Warsh wants to shrink. Moreover, a view persists within the Fed that high yields have legitimate reasons: New York Fed President Williams characterized the rise on September 2 as a reflection of economic strength and aggressive tech investment, stating that Treasury interventions do not complicate monetary policymaking.

Market Tour

Equities

Wall Street rose ahead of the Fed on Wednesday but reversed post-decision: the Dow fell 631 points (1.21%) to 51,462; the S&P 500 dropped 0.44% to 7,552; and the Nasdaq Composite closed flat (down 0.01%). The divergence stems from sectors: technology was the top gainer among 11 primary sectors, while energy was the worst performer, losing 3% amid the oil pullback. Chevron fell 2.9%, Exxon down 3.5%, while Devon Energy and ConocoPhillips lost over 5%.

The semiconductor index (SOX) rose 0.6%, notating its first notable gain since the joint slowdown warnings from AI executives, marking the first sign that Monday’s sell-off has paused. Released early in the session, August retail sales topped expectations, showing consumers continue to spend despite rising prices at the pump.

Stock-specific highlights: Robinhood fell 5.5% after Clarity dropped and insider trading charges were filed against two former engineers; Intel rose 4% on news that SK Hynix is in talks for US memory chip production; IBM gained 4.4% after its chip unit Anderon announced a funding deal with the US government; and Boeing fell 3.7% after stating that stabilizing 737 MAX production at 47 planes per month is taking longer than expected.

Market breadth remains weak: 76 new highs versus 430 new lows on the NYSE, and 257 new lows on the Nasdaq. Trading volume hit 18.42 billion shares, noticeably above the 20-day average of 15.33 billion.

Asia rebounded on Thursday on bets that the Fed is getting ahead of inflation: MSCI Asia-Pacific ex-Japan rose 0.4%, the Nikkei gained 0.5% to 64,074, the KOSPI added 0.55% to 6,755, and the Taiex advanced 1% to 46,313. China moved in the opposite direction: the CSI 300 fell 0.4%, and the Hang Seng dropped 0.85% to 24,503. The ASX and Sensex traded slightly higher, though both maintain RSIs in the 29–30 oversold zone.

European exchanges are expected to open 0.5% higher, following Wednesday closes where the DAX gained 0.5%, the CAC rose 0.6%, and Italy added 0.8%. Nasdaq futures are up 0.6–0.7%, and S&P futures are up 0.5%. The sole notable outlier on the board today is Turkey: the BIST 100 dropped 5.5% to 13,123, taking its weekly losses to 9.5% and sending the index below its 200-day moving average with an RSI of 29 in oversold territory. The magnitude of this move represents an uncharacteristic divergence from the global picture, unlinked to today’s news items and requiring close tracking via local developments.

Foreign Exchange

The dollar index jumped 0.7% overnight to 100.33, its strongest level since July 31, entering an uptrend with an RSI of 62. Carol Kong of CBA clearly outlines the driver: Warsh spoke more hawkishly than expected, and his lack of pushback on future hikes caught markets by surprise, driving up rate pricing and lifting the dollar; the bank’s outlook favors dollar appreciation due to FOMC expectations.

The euro sits at a seven-week low of 1.1456–1.1468 in a downtrend (RSI 41); sterling is flat at 1.3377–1.3383 ahead of the BoE, down 1.2% on the week. The yen trades at a two-week weakness of 155.95–156.20; it has pulled back from last week’s 152.89 peak, but this retreat looks like position-lightening ahead of tomorrow’s BOJ decision. Yen crosses are slightly lower today: EUR/JPY at 178.8, GBP/JPY at 208.7, and CHF/JPY at 188.97, all carrying RSIs in the 30–35 range.

USD/CHF rose 0.8% to 0.8255 with a weekly gain of +2% in an uptrend; the franc is not seeing safe-haven demand this month. The Australian dollar trades at 0.7096–0.7114 and the New Zealand dollar at 0.5713–0.5728, both with an RSI of 31. USD/CAD climbed to 1.3989 as the oil pullback hit the Canadian dollar. USD/MXN and USD/ZAR are up 1.9–2% on the week; dollar strength is impacting emerging market currencies as well. USD/TRY hit a new high at 48.67.

The correlation table continues to show this month’s persistent anomaly: the 60-day correlation between the Australian dollar and the VIX stands at +0.08, but has jumped to +0.51 over the last 20 days, while the euro-VIX correlation is +0.32. On risk-off days, these currencies are positioning alongside the dollar rather than against it.

Commodities

Oil extended its sharp two-day decline, with Brent at 105.7 and WTI at 102.1 dollars; they fell 2.7% and 3.2% respectively on Wednesday. The catalyst is supply-side relief: Saudi Arabia is offering Asian refiners additional crude loadings via ship-to-ship transfers off Oman’s Sohar port, offsetting part of the global supply damage caused by drone attacks on the East-West pipeline routing to the Red Sea. Hiroyuki Kikukawa of Nissan Securities notes that supply tightness fears have eased slightly following the news, while expectations of reduced Middle East tensions ahead of next week’s US-China summit are also capping price gains.

However, a warning from Saxo Bank maintains balance: accelerated flows through Hormuz only partially compensate for export barrels lost following the pipeline-closing drone attacks; two pump stations servicing the pipeline were damaged last week, and the repair timeline remains uncertain. DBS’s Q4 baseline scenario sees war de-escalating and Brent balancing in the $85–95 range; however, head of energy research Suvro Sarkar states that under the current pessimistic scenario—if attacks in Hormuz and the Red Sea persist—prices could spike toward $120 before normalizing around 100.

In precious metals, gold rebounded 1% after an overnight 0.7% drop, returning to $4,305–4,325; it is down 3% on the week and sits just 0.2% above its 200-day moving average, technically marking its most fragile position of the year. Silver trades at 64, platinum at 1,783, and palladium at 1,302 dollars, with weekly losses ranging between 5% and 7%; a strong dollar and rising short-term yields are collectively weighing on precious metals. Copper rebounded 1.5% to $6.53, maintaining its uptrend. Wheat is in an uptrend at 731.75, and cocoa sits at 5,951. The 5.4% drop in coffee continues to carry contract-roll effects.

Crypto

Bitcoin digested the Fed decision and trades at $76,450; it recovered after dipping below 75,000 earlier in the week, but remains down 7% from levels above 82,000 at the start of the month. The decision itself was largely priced in; Jeff Ko, head analyst at ViaBTC, reads it this way: The Fed is signaling no aggressive tightening cycle for now, and the market takes confidence from the effort to bring inflation under control. Bitcoin not collapsing at the moment of the announcement supports this.

Still, three separate headlamps blow simultaneously: rising US yields, a strengthening dollar, and diminishing near-term regulatory expectations following Clarity’s drop. Institutional flows remain negative: US spot bitcoin ETFs saw $450.4 million in net outflows on September 15, led by Fidelity’s FBTC ($214.8M) and BlackRock’s IBIT ($161.7M), with an additional $151.8 million exiting on September 16.

Technically, the 75,000 zone is becoming an increasingly important battleground: Bitcoin absorbed a failed Clarity vote, hundreds of millions in ETF redemptions, and the kickoff of a new Fed tightening cycle within a few days, continuing to trade near this level for now. Maintaining a positive gamma environment suggests support zones will hold and pullbacks will be absorbed; meanwhile, the presence of leveraged short sellers entering positions post-event keeps the possibility of a short squeeze alive should prices return to 80,000.

The story of the day in altcoins is Zcash: ZEC surged 23% in 24 hours to $1,369. The trigger came when Paradigm co-founder Matt Huang defined ZEC as a privacy complement to Bitcoin and announced that his firm holds a position. Huang advocated for continued funding for developers while arguing that token holder votes on network changes should be combined with other decision-making mechanisms. Zcash allows users to send funds without revealing identities or amounts, and holders recently supported proposals that accelerate payments while preserving the planned supply cuts shared with Bitcoin.

Among other majors, Solana rose 2.7% approaching $99.8, AVAX gained 2.7% to 7.52, and ENA jumped 7.9% to 0.151, pushing its monthly gains to 82%; BNB and HYPE added over 2%, ether rose 1.6% to 2,442, and dogecoin gained 1%. XRP is the sole exception: it remained flat and continues as the weakest major with a 7% weekly loss, paying the price for being the most crowded trade ahead of Clarity expectations.

Levels to Watch

• BoE (Today): Rates expected on hold. A split vote and hawkish hints on November could rally sterling off its 1.3377 low; a fully dovish text opens up sub-1.33 levels.
• BOJ (Tomorrow): A hike to a 31-year high is virtually certain and priced in. The decisive factor will be Ueda’s pace signals post-September; a rapid normalization message targets the 152.89 peak, while a cautious tone brings 157–158 into view.
• US 10-Year (5.00% / 5.25%): Hovering just below the threshold. ING’s next target is 5.25%; if the Fed’s anti-inflation credibility holds, curve flattening will persist, bringing relief to the long end.
• Dollar Index (100.33): Seven-week high and uptrend. Sustained trading above this level signals continuous pressure on gold, bitcoin, and emerging market currencies.
• Bitcoin (75,000 / 80,000): Battleground and reversal threshold. If this zone—which absorbed three shocks—holds, leveraged short positions face squeeze risks.
• Brent (105 / 120): Support from Omani cargoes and DBS’s pessimistic scenario target. Two-way risk remains open until the pipeline repair timeline is clarified.

Weekly Calendar

Date	Day	Event
Sept 17	Thursday	BoE rate decision (expected flat at 3.75%, split vote risk); Eurozone final August CPI; US weekly jobless claims
Sept 18	Friday	BOJ decision (hike to 31-year high nearly certain; Ueda’s pace signal critical for the yen)
Next Week	—	US-China summit (Middle East tensions and AI security on the agenda)
October	—	FOMC (50% hike probability; Goldman’s new baseline scenario); Senate breaks for election campaigning early October
Nov 3	—	US midterm elections; followed by a four-week “lame duck” period as the final window for Clarity