WS #13004

The Federal Reserve held rates steady at 3.50%-3.75% in a 9-3 vote, with three dissents favoring a 25bp hike—the first time since 2016 that three members dissented in the same direction. Fed swaps now price a 59.9%-74.5% probability of a September hike, up from ~36% pre-decision. Chair Warsh's press conference is ongoing, with early remarks noting 'collegial discussion' and 'impressive resilience' in the economy. The hawkish tilt, driven by elevated inflation partly due to energy supply shocks from the Iran conflict, reinforces a bearish bias for growth/multiple stocks and bullish for financials. Meanwhile, geopolitical tensions escalate: US-Saudi airstrikes in Iraq killed ~20 Iranian advisers, Iran launched missiles at a US base in Jordan (intercepted), and the US military is escorting oil/gas through the Strait. South Korea's KOSPI continues its crash, down ~40% from peak, losing ~$2.18 trillion. Apple hit all-time highs ahead of earnings, while HIMS plunged on FTC lawsuit. OpenAI announced free AI access for 100,000 researchers, and Sam Altman is meeting White House Chief of Staff Wiles ahead of the AI framework deadline.