Bitunix Analyst: Raising interest rates or not is not the end; the market trades as a function of Walsh's policy
Comparative news is that on the eve of the Federal Reserve's interest rate decision, the market is no longer just a dualistic choice of raising interest rates or standing still, but a change in the monetary policy decision-making model. Walsh continues to downplay forward-looking guidance, causing the market to lose the basis for predicting policies in the past. Wall Street can only find answers on its own through probabilistic trading and hedging positions. This is also the reason why unclosed federal funds futures contracts recently hit new highs, and demand for interest rate hikes is rising at the same time. Even if most institutions still expect interest rates to remain unchanged this time, what will really influence market fluctuations will be how Walsh defines the risk of inflation, whether to accept short-term shocks caused by energy prices, and whether to establish a new policy framework through post-conference speeches. In other words, the focus of this FOMC is not interest rate results, but whether the market can gradually understand Walsh's future response function, because this will directly affect the repricing of global capital's risk premium on dollar assets.
The enterprise level also revealed that capital allocation ideas are changing. Amazon chose to reduce internal AI models and focus resources on cutting-edge model research, reflecting the shift in AI competition from model quantity to model quality and resource concentration. This means that large technology companies are beginning to pay more attention to capital efficiency rather than expanding their R&D footprint indefinitely. Market attention is gradually being focused on return on investment and cash flow efficiency, and the valuation logic of highly valued technology stocks may change accordingly.
On the other hand, the situation in the Middle East remains highly sensitive. Although the US and Iran continue to seek diplomatic solutions through Oman and other third parties, and Trump also sent signals of cooperation after talks with Netanyahu, Iran's firing of missiles at US military bases, attacks on Saudi oil tankers by the Houthis, and disputes over the management of the Strait of Hormuz all indicate that the conflict is still highly repetitive. The market has yet to fully account for the worst-case scenario, so every military friction may push up the crude oil risk premium again, further affecting inflation expectations and the Fed's policy space. OPEC+ has released a signal to maintain stable production in 2026 after September, which also means that the supply side will not increase significantly in the short term. If supply in the Middle East is blocked again, oil prices will be more likely to be driven by events and amplified fluctuations.
It is worth noting that South Korea's KOSPI index has been drastically reduced by more than 30% from its June high, indicating that the Asian market has taken the lead in adjusting overvalued technology stocks and the global liquidity environment, in stark contrast to US stocks, which remain relatively high. If the Federal Reserve sends a more hawkish signal than market expectations, US technology stocks may face valuation pressure similar to that of the Asian market; conversely, if Walsh keeps interest rates unchanged and continues to make decisions based on data, the market focus will quickly return to the verification of corporate earnings reports and AI capital expenditure.
In the short term, what the global market is really waiting for is not an answer to interest rates, but whether the three main lines of policy framework, corporate profit, and geopolitics can work together to push back the current high risk premium.
