The Fed Hiked | The Ten-Year Broke 5% Again | Bitcoin Held $75K | Regulators Move Past CLARITY

The Fed delivered the hike. The selloff came from what followed.

The central bank raised rates by 25 basis points to 3.75% to 4.00%, its first increase since July 2023. The vote was unanimous.

Stocks initially held up, then fell after Chair Kevin Warsh said inflation remains too high. The Dow dropped about 1.2%. The S&P 500 lost 0.45%, while the Nasdaq was flat.

The bond market moved with it. The 10-year yield climbed back above 5% to about 5.02%. The 2-year rose more than 7 basis points to around 4.74%. The dollar index gained about 0.7%.

Banks took a larger hit. Wells Fargo (WFC), Bank of America (BAC), Goldman Sachs (GS) and Citigroup (C) all fell more than 3%.

The Signal

The hike was priced. The path was not. Stocks sold off when the Fed made clear that Wednesday may be the start of tightening, not the end.

Oil gave the Fed some relief, but not enough to change the inflation problem.

WTI fell 3.2% to $102.43, while Brent lost 2.7% to $105.83 after U.S. officials said Saudi Arabia’s East-West pipeline could restart within days.

Energy Secretary Chris Wright called the outage brief and temporary. Independent analysts are less certain, with satellite images showing damage at a pumping station.

Saudi Arabia is moving more crude through Hormuz while the pipeline remains offline. Four supertankers with combined capacity of about 8 million barrels were seen loading Tuesday.

The risk has not disappeared. At least two vessels have been attacked since Saturday, and oil remains more than 16% higher this month.

Energy Signal

Oil fell on repair hopes, not on the end of the supply shock. Brent near $106 still leaves the Fed fighting an inflation input it cannot control.

The dot plot turned one hike into a cycle.

Sixteen of 18 Fed officials expect at least one more increase this year. Four see room for two. The Fed also raised its 2026 inflation forecasts, with headline PCE at 3.7% and core PCE at 3.4%.

Officials do not expect inflation to return to 2% until 2029. The unemployment forecast fell to 4.1%, giving the Fed more room to stay tight.

The consumer is holding up too. August retail sales rose 1.2% from July and 6% from a year ago.

That explains the hawkish message. Warsh said inflation has not shown enough improvement and financial conditions are not very restrictive. Mortgage rates are already near 7.19%, but demand has not broken enough to settle the inflation question.

Macro Signal

The Fed removed a dose of accommodation. The 10-year moving back above 5% shows the market expects tighter money to last beyond Wednesday.

Higher rates are hitting capital before they hit demand.

Bank stocks fell more than 3% as the yield curve and tighter financial conditions reset the outlook for credit and deal activity. The same cost pressure now sits over AI.

That industry has its own policy fight. Anthropic policy chief Sarah Heck said AI firms cannot operate on an “honor code” and should not be allowed to check their own work.

Anthropic wants outside oversight. OpenAI CEO Sam Altman and Google DeepMind’s Demis Hassabis have backed parts of the safety push. Nvidia (NVDA) CEO Jensen Huang argues new laws are not needed, while Meta (META) has slowed some internal work without calling for an industry-wide pause.

The SEC is also pulling back in another part of corporate policy. Chair Paul Atkins proposed shifting more oversight of shareholder votes on climate, pay and governance issues toward state law.

Capital Signal

The price of capital is rising while the rules around technology and corporate governance are changing. That makes future cash flows harder to price even before growth slows.

Bitcoin absorbed the hike better than equities.

It traded between roughly $75,000 and $76,500 after the Fed decision and held near $75,600. Ether moved between about $2,370 and $2,430 before settling near $2,376.

The Fed is still the problem. New projections point to rates around 4.1% through the end of 2027, while another hike this year now sits inside the Fed’s base case.

Crypto also entered Wednesday without CLARITY. After Tuesday’s 49-50 Senate failure, the SEC and CFTC are preparing to move without Congress.

SEC Chair Paul Atkins said the agency will act to give investors and crypto firms more certainty. CFTC Chair Mike Selig said his agency is ready to move ahead with its rules.

That gives crypto a path forward, but not the same one CLARITY promised. JPMorgan warned agency rules are easier for courts or future administrations to reverse than federal law.

The Verdict

Bitcoin held $75,000 through the first hike since 2023. The harder test is whether it can keep holding if one hike becomes two and crypto regulation shifts from Congress back to agencies.

Wednesday answered the easy question.

The Fed hiked 25 basis points. The vote was unanimous. Bitcoin held near $75,600.

The harder questions moved forward.

Sixteen of 18 officials see another hike this year. The 10-year is back above 5%. Brent remains near $106 even after falling 2.7%. CLARITY is stalled, leaving the SEC and CFTC to build rules without Congress.

Those stories now meet in the same trade.

Higher rates raise the cost of capital. High oil keeps the inflation clock running. Agency-led crypto rules provide a path, but less durability than a federal law.

Bitcoin survived the first hike.

Now it has to price the cycle.

Reader Poll:

What is crypto’s biggest risk now?

More Fed hikes

5% Treasury yields

Oil above $100

No CLARITY Act