📰 Fed Hikes Rates First Time In 3 Years! Oil Crashes From 4-Month Highs, Dollar Hits 5-Week Peak

1 Key Snapshot

· 🏛️ Fed unanimously raised rates by 25 bps to 3.75%-4.00%, the first hike in three years, signalling further tightening ahead.

· 🛢️ Saudi Arabia boosted crude shipments via Oman, easing supply disruption fears. WTI fell 3.21% to $102.43/bbl.

· 📊 US August retail sales jumped 1.2%, the strongest gain since March, giving the Fed room to keep tightening.

2 Market Outlook

Key Events

- Fed delivers first rate hike in three years. The federal funds target range was lifted to 3.75%-4.00%, with officials flagging further rate rises in the coming months. Warsh backed the unanimous decision, effectively acknowledging persistent inflation under the Trump administration. → 2Y US Treasury yield climbed to 4.744%, highest since July 2024; US Dollar Index rose 0.3% to 99.961, near a five-week peak.

- Saudi Arabia ramps up crude shipments through Oman. Saudi increased crude loading volumes via Oman, easing supply disruption fears and pulling energy stocks lower. → WTI -3.21% at $102.43/bbl; Brent -2.69% at $105.83/bbl. Dow Jones fell 1.21% to 51461.78.

Exclusive View

The Fed’s unanimous rate hike marks the start of a new tightening cycle. Warsh’s support removes doubts over internal policy divisions and shows the Fed’s inflation tolerance has become very low. Saudi Arabia’s move to ship more crude via Oman is a pragmatic workaround for Hormuz risk, but it cannot fully replace the strait’s shipping capacity.

3 Overnight Market Action

US Equities

Dow Jones -1.21% at 51461.78; S&P 500 -0.44% at 7552.14; Nasdaq -0.01% at 25978.43. Energy led losses.

European Equities

STOXX 600 +0.5% at 637.09.

Fixed Income

2Y US Treasury yield hit 4.744%, highest since July 2024; 10Y yield +1 bp to 5.006%.

Commodities

WTI Oct -3.21% at $102.43/bbl; Brent -2.69% at $105.83/bbl. COMEX Gold -0.70% at $4302.5/oz; Silver -0.68% at $63.42/oz.

FX

US Dollar Index +0.3% at 99.961; EUR -0.68% to 1.1464; USD/JPY +0.77% to 156.27; GBP -0.69% to 1.3381.

Crypto

Bitcoin +0.62% to around $76139; Circle down over 6%, Robinhood down over 5%, Coinbase down over 4%.

4 Macro News

1. 🏛️ Fed unanimously hiked 25 bps to 3.75%-4.00%, the first increase in three years, with officials signalling more hikes ahead. Warsh backed the decision, acknowledging persistent inflation under the Trump administration.

Insight: The unanimous vote marks the start of a new tightening cycle. Forward guidance suggests this may not be the last hike.

2. 🛢️ Saudi Arabia increased crude shipments via Oman, easing supply disruption concerns and pulling oil lower from four-month highs.

Insight: Saudi Arabia’s alternative route reduces extreme supply risk but cannot fully replace the Strait of Hormuz. Oil remains sensitive to actual shipping conditions.

3. 📊 US August retail sales rose 1.2%, the strongest gain since March. Resilient consumption supports the Fed’s hawkish stance.

4. 📉 Foreign holdings of US Treasuries fell for the second straight month, led by Japan and China, dropping to $9.248 trillion in July.

5 Global Corporate News

1. 💾 SK Hynix said its US chip partnership with Intel remains undecided, trimming Intel’s pre-market gains.

6 Today’s Focus

· 🇬🇧 Bank of England September rate decision.

· 📊 US weekly initial jobless claims for the week ending September 12.

· 📊 US Philadelphia Fed Manufacturing Index for September.