The Fed Votes Wednesday, the Ten-Year Voted Friday

The Committee Arrives Late to Its Own Tightening

Five percent turned up on a Tuesday morning and nobody had put it on the calendar

Monday came with a ready-made narrative. Two frontier artificial intelligence firms asked the industry to slow down, one conceded its listing would slip, the chip index lost roughly 5.9%, and every desk had the column filed before lunch. Nvidia off 3.4%. Intel off 5.6%. A tidy story about the future being repriced.

Whilst that was happening, the ten-year Treasury yield took twenty-one basis points in four sessions and printed 5.041% at 04:02 this morning. Highest since 2007. It has not closed above 5% since July of that year, which is to say since before the last crisis started.

The Federal Open Market Committee convenes today and will ratify a quarter point on Wednesday, lifting the range to 3.75% to 4.00%. Congratulations to everyone involved. The ten-year is already a hundred and four basis points above the top of that range, and it got there whilst the committee sat in blackout, saying nothing, to anybody.

Equity futures are down roughly half a percent, which is the tape noticing something it would rather not discuss. Gold is at a five-week low, the dollar near a two-week high. Both are the same sentence as the ten-year.

Wednesday at 14:00 ET the Fed publishes its projections. The curve has read them.

The One That Mattered

Monday got sold to you as an artificial intelligence story, and the chip index obliged with a 5.9% fall. Meanwhile the instrument that sets mortgage rates, corporate borrowing costs and the discount rate under every one of those AI cash flows printed 5.041%, last seen in 2007, whilst the people who allegedly set the price of money observed a self-imposed silence. Wednesday’s quarter point lands a hundred and four basis points below where the ten-year already trades. The committee is not leading. It is catching up.

Who is setting the price of money now, the committee that meets tomorrow or the ten-year that has already moved? We went down that rabbit hole in today’s Macro Edge. [link]

Stock Market Edge

Semis Fell 5.9% Because the Builders Asked Nicely

The bigger number was two decades old and had no keynote

Premarket snapshot:

S&P 500 futures sit 0.49% lower at 04:02 ET, Dow futures 0.66% lower, Nasdaq 100 futures 0.48% lower. Monday closed at 52,421.20, 7,619.98 and 26,186.41, with intraday lows deeper still. Today’s September to December futures roll flatters the screen percentages, so the cash premarket is the honest read, and it is red.

Sector rotation:

Semiconductors did the suffering. The Philadelphia Semiconductor Index fell roughly 5.9%, entering Monday already near 19% below its June record. Nvidia lost 3.4%, Intel 5.6%. Large-cap technology outside chips found a bid and hauled the Nasdaq back from a 1.5% early loss, which is the AI trade hedging against itself. GE Vernova fell about 9% to $871 on a sell initiation carrying a $470 target.

Earnings or guidance:

Bank of America’s chief executive put third-quarter investment banking fees at $1.6bn to $1.8bn, down 10% to 20% from $2bn. The fee pool is shrinking precisely as the largest capital expenditure cycle in a generation goes looking for funding.

Cross-asset nuance:

The thirty-year sits near 5.33%. Treasury’s own series closed Friday at 4.96% and 5.35%. The dollar holds near a two-week high on higher real yields, gold is at a five-week low, and VIX is 17.81. Nothing there disagrees.

Crypto Market Edge

One Green Flow Day After Four Red Ones Is Not a Recovery

Ether got the money, bitcoin got the Fed

Price snapshot:

Bitcoin traded 76,838.23 at 05:27 ET against an overnight open of 78,175.00 and a low of 76,647.52. Ether sits near $2,475. Monday opened at 76,806.19, reached 77,873.33, then thought better of it. The 78,242.76 overnight high lasted about as long as the enthusiasm behind it.

Flows & positioning:

US spot bitcoin funds took roughly $159.9m net on 14 September, ending four consecutive outflow sessions that had removed about $463m between the 8th and the 11th. Headlines called it a return of demand. For the year the complex remains near $1bn in net outflow, which makes one green day a breather. Ark Invest spent Monday selling its own bitcoin fund.

Leadership & rotation:

Spot ether funds drew about $121.1m for a second straight inflow day, ETHA at $80.5m, Grayscale’s Mini ETH at $16.2m, against a $5.4m redemption from Invesco’s QETH. Money is moving around inside crypto rather than into it, which is a rotation signal dressed up as a demand one.

Catalysts & roadmap:

The FOMC decides at 14:00 ET Wednesday with a fresh projections round, relayed pricing 84% to above 90% for a quarter point. Bitcoin sits 4.3% under Strategy’s 80,318 average cost, widened from 3.3%.

TL;DR: The Bottom Line

• The ten-year printed 5.041% at 04:02 ET, its highest since 2007, and has not closed above 5% since July of that year. The policy rate remains 3.50% to 3.75%.
• Wednesday’s expected quarter point lands a hundred and four basis points below where the ten-year already trades. The committee is ratifying a repricing it did not cause.
• Semiconductors fell roughly 5.9% because two frontier AI firms asked the industry to slow down. It was the loudest number Monday and not the largest one.
• Brent near $107.30 with the Saudi bypass pipeline still shut, and Riyadh reportedly routing more barrels through the strait the pipeline was built to avoid.
• Bitcoin funds bought $159.9m after four selling days, the year stays near $1bn in net outflow, and price sits 4.3% under Strategy’s average cost.

Fun Fact

The VIX You Quote From 1997 Is Not the VIX You Quote Today

Cboe reassigned the name in 2003 and quietly rehoused the original

The index launched in 1993 measured expected volatility from S&P 100 options. In 2003 Cboe rebuilt the calculation around S&P 500 options and handed the famous name to the new version. The original still exists under the ticker VXO. Every chart of “the VIX in 1997” is a different instrument wearing the same badge.