Get Ready! The Fed Is Set to Shake Up the Markets
16th September
Key takeaways
Three central banks decide within 48 hours: the Fed (Wed), BOE and BOJ (Thu/Fri).
Global bond yields hit multi-decade highs in the US, UK, and Japan - China's the outlier.
The CLARITY Act failed in the Senate, 50-49 - a setback for crypto regulation, not the end of it.
Lukman Otunuga
Head of Market Research
The next three days will be pivotal - keep watch for interest rate announcements from the Fed, the BOE, and the BOJ.
Central Bank Snapshot
Note: the BOJ's current 1.00% rate is already the highest level since September 1995 - this week's expected hike would push it even higher, to a fresh three-decade peak.
What's to Watch
Fed vs. Trump
The Fed's independence is genuinely being tested. Fed Chair Warsh looks set to deliver a decision that runs counter to President Trump's public wishes, roughly four months after Trump appointed and praised him. Trump, Vice President Vance, and Treasury Secretary Bessent have all publicly pushed for the Fed to hold or cut rates in the lead-up to this week's meeting.
The Global Yield Crisis
The bond yield surge has become a genuinely global story - with one notable exception. US 10-year yields have climbed to their highest level since 2007. UK 30-year gilts have hit levels last seen in 1998, with the 10-year gilt at a 2007-era high. In Japan, yields have reached levels not seen since 1996. Only China has remained largely insulated from the move.
Rising interest rates this week are likely to push yields even higher still.
FX: USD Index Movements Are Key
What could move the asset:
Bullish factors: The Fed raises rates by 25bps or more; rising expectations of the next hike.
Bearish factors: The Fed holds rates steady or lower; no signs of a further hike ahead.
Technical overview: The US Dollar Index is moving in a W pattern, with 99.90 as the key resistance level to watch for a confirmed breakout.
Bitcoin
The CLARITY Act, a bill intended to bring regulatory clarity to US crypto markets, failed to advance in the Senate this week. The procedural cloture vote fell 50-49, short of the 60 votes required.
This is a setback for the crypto industry, which had viewed the bill as a path to legal certainty for digital assets in the US. That said, the bill isn't dead — it's a procedural delay, and both the SEC and CFTC have indicated they'll continue advancing crypto rules independently in the meantime.
Frequently asked questions
The Fed, BOE, and BOJ all announce decisions within a 48-hour window - an unusually concentrated stretch of major rate risk.
Trump appointed Warsh partly expecting a more dovish Fed; if Warsh hikes anyway, it's seen as a genuine test of the Fed's independence from political pressure.
It's not dead, but stalled - the Senate could revisit it, though the pre-election calendar is tight, and regulators (SEC, CFTC) say they'll push ahead with rules on their own in the meantime.
