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The Fed hiked. The 10-year closed above 5%. Housing just reported.
The Federal Reserve raised rates a quarter point on Wednesday — the first hike since 2023 — and Chair Kevin Warsh spent the press conference making sure nobody mistook it for a one-off. The vote was unanimous. The dot plot leans toward another hike this year. The previously projected 2027 cut is gone.
Markets heard him. Stocks faded through the 2:30 press conference. The 10-year Treasury closed at 5.003% — its first close above 5% in 19 years. The 2-year hit a 52-week high of 4.721%, sitting 72 basis points above the top of the new funds range. That is the bond market pricing more than one additional hike.
So what: this was a hike with a warning label. Warsh: “Inflation is too high and has been for too long.” He called the move “removing a dose of accommodation” and, asked for forward guidance, said: “I’m not in the forward guidance business.” Translation: watch the data. Thursday’s housing prints and Lennar’s call land in a market that is now listening differently.
S&P 500: Broke the 7,588–7,620 zone. Next supports 7,500 then 7,292. Resistance 7,664 / 7,698.
Rates: 10-year closed 5.003%. 2-year at 4.721% (72 bp above the funds range).
Volatility: VIX 18.38 (highest close in seven weeks). MOVE index 83.71 (near its highest since mid-May).
So what: the equity drawdown is orderly. The violent repricing is in rates. Watch the bond market, not just the stock market.
The statement kept the familiar language — activity expanding at a solid pace, inflation remains elevated — and added: “Today’s policy action will support a timelier return to the Committee’s 2 percent goal.” No change to the balance-sheet runoff.
On the dots: 12 of 18 participants see one more quarter-point hike this year; 4 see two; 2 see standing pat. The longer-run neutral rate drifted modestly higher. Warsh submitted no projections. On inflation he was blunt: this summer’s readings “do not tell me that underlying trends have meaningfully improved.” Asked about the White House, he stayed in lane: “Part of the independence of the Federal Reserve is we stay in our lane.”
So what: CPI is 3.4%. PCE is running 3.7% over twelve months and 4.1% over six. Oil is still over $100. Inflation has run above target for five years. The Fed is no longer debating whether policy is restrictive enough — it is acting like it isn’t.
8:30 AM ET: Initial jobless claims (consensus 207K), August housing starts (1.30M), building permits (1.40M), Philly Fed (34.0 expected). 10:00 AM: Pending home sales (+0.5% expected). 1:00 PM: 10-year TIPS auction. 4:30 PM: Fed balance sheet.
Overnight / morning: Bank of England rate decision (expected hold at 3.75%, though oil has raised the odds of a later move). Evening our time: Bank of Japan decision (hike still expected).
So what: it is a housing double-header the morning after a rate hike, with the 30-year mortgage at 7.22%. Every housing print is now a policy-transmission read. A soft claims number will not move this Fed; a hot one will move the 2-year.
Lennar (LEN) reported Wednesday after the close and holds its call Thursday at 11:00 AM ET. Results: revenue $8.05B (miss vs ~$8.3B), EPS $1.19 GAAP / $1.23 adjusted (miss). Gross margin on home sales 15.8%. New orders –9%, deliveries –3%. Backlog $6.3B. Q4 guidance: orders 19.5–20.5k, deliveries 22–23k. Shares closed Wednesday at $78.36, down 2.1%.
So what: this is the first corporate read on housing demand the morning after a hike. What 7.22% mortgages are doing to entry-level buyers — straight from the company selling them the houses — matters more than the EPS line. Listen for incentives, margins, and any change in tone on demand.
IPO watch: Holtec Nuclear (HNUC) is pricing a large ~$825M IPO around Thursday/Friday. Nuclear and advanced-reactor exposure tied to the AI data-center power theme. Also pricing Friday: Electra Therapeutics and Orion180 Insurance.
The S&P broke the 7,588–7,620 support zone and closed in the 7,530s. Next supports: 7,500, then 7,292. Resistance overhead at 7,664 and 7,698. The 2-year at 4.721% is doing the Fed’s hawkish work for it. VIX at 18.38 is elevated, not panicked. The more important gauge is the MOVE index at 83.71.
So what: equity volatility remains contained. Rate volatility is the real signal. If you are watching one gauge for what comes next, make it the bond market’s.
Bitcoin (~$76,300) and ether (~$2,416) were roughly flat — crypto mostly ignored the Fed. The real story is flows and Washington. U.S. spot bitcoin ETFs bled $450 million on Tuesday, the largest single-day outflow since June; ether ETFs lost $141 million. The driver was regulatory: the Senate failed to advance the CLARITY Act, about ten votes short of 60, effectively killing it for 2026.
So what: crypto’s near-term overhang is regulatory, not monetary. ETF flows are the tell — watch whether Tuesday’s outflow was a one-day reposition or the start of a bleed. (opinions only — not recommendations)
1. Thursday 8:30 AM data. Claims, starts, permits, Philly Fed — the first prints of the hiking regime.
2. Lennar’s call at 11:00 AM. Entry-level demand, margins, incentives, and guidance.
3. The 10-year above 5%. Does it hold, and what does it do to mortgage rates from 7.22%?
4. Bank of England (morning) and Bank of Japan (evening). The global rate map is shifting.
5. Friday’s Fed speakers. Bowman and Schmid get the first word after Warsh — do they echo him or soften him?
— The Dull Investor
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This newsletter is for informational purposes only and does not constitute investment advice. The Dull Investor is not a financial professional providing personalized recommendations. Always conduct your own due diligence.