Intelligence Pulse
On September 16, the Federal Reserve, now under Chair Kevin Warsh, hiked rates 25 basis points to a 3.75%–4.00% range — the first increase in more than three years. The dot plot showed 16 of 18 officials expecting at least one more hike this year, with a median year-end rate of 4.10%. Markets are already pricing it in: per CME FedWatch, the odds of another 25bp hike at the October 28 meeting sit between 54% and 55%. The immediate fallout: the 5-year Treasury yield broke above 5% for the first time since 2007 (5.03%), and Wall Street felt it — the Nasdaq and Russell 2000 fell on Wednesday. Why it matters: the cost of financing anything — a government, a company, a mortgage — just reset to a level not seen in almost two decades, and it isn’t done climbing.
AI Frontier
BlackRock warned on September 23 that annual US financing demand could top $7.5 trillion by 2030, driven largely by AI infrastructure build-out — colliding head-on with mounting government debt in what the firm calls the most intense competition for capital since the 2008 crisis. Practical implication: betting on “AI winners” is no longer just a growth thesis — investors need to price in the cost of capital, because AI is now bidding for the same dollar as a Treasury auction.
Signal vs. Noise
The noise: this is a clean fight between central banks, and whoever tames inflation fastest or defends its currency best “wins.”
The signal: there is no clean winner — only a redistribution of who foots the bill. Colombia is holding its rate at 12% (against the Fed’s 3.75%–4.00%) — an almost 800bp gap that draws carry-trade capital and props up the peso (the exchange rate closed at COP 3,208.66 on September 23), but it also keeps domestic credit expensive and growth capped: Bancolombia just raised its 2026 inflation forecast from 6.4% to 6.7% for that same reason. The US is fighting its own inflation with a bond market at levels not seen since 2007. And bitcoin — an asset that pays no interest — flinched first: it dropped to $74,888 the same day the Fed hiked, before recovering to $86,276 on roughly $999 million in institutional inflows from BlackRock, ARK, and Fidelity. Nobody wins the rate war. Everybody just pays a different bill.
Quote of the Day
“Interest rates are to asset prices what gravity is to the apple. When rates are low, there’s very little gravitational pull on asset prices.” —Warren Buffett, Chairman of Berkshire Hathaway. Today that gravity increased across every asset class at once — bonds, growth stocks, even bitcoin. Nobody escapes the physics.
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