WS #6235

The Federal Reserve held rates steady at 3.50%-3.75% as expected, but the statement and vote revealed significant internal division. The vote was 8-4, the highest dissent since 1992, with one member favoring a quarter-point cut and three dissenting against the inclusion of an easing bias. The Fed upgraded its inflation characterization from 'somewhat elevated' to 'elevated,' explicitly citing global energy prices, and highlighted 'high uncertainty' from Middle East developments. This hawkish tilt, combined with the unprecedented dissent, signals a central bank deeply conflicted about the stagflationary pressures from the Iran conflict. Oil prices surged over 7% on the day, with Brent breaking above $119/bbl and WTI above $107, driven by reports that diplomatic solutions to the Strait of Hormuz blockade are failing. The Pentagon is withdrawing the USS Gerald R. Ford carrier from the Middle East, reducing US firepower as talks stall. Separately, CENTCOM has drafted plans for targeted military strikes against Iran, per sources, representing a significant escalation signal. The UK is rallying a multinational naval force to counter Russian threats, adding to geopolitical tensions. OPEC+ is expected to approve a quota increase of 188,000-206,000 bpd at its Sunday meeting, excluding the UAE, which could provide a minor counter-signal to the supply crisis. In corporate news, Pershing Square USA IPO opened at $41.75, well below the $50 IPO price, indicating weak demand. Teradyne delivered a massive Q1 beat but conservative Q2 guidance sparked an ~18% sell-off, signaling potential AI test cycle peaking concerns. CoreWeave is building out data center capacity faster-than-expected, which could drive revenue upside. The overall narrative is ESCALATING on the US-Iran front, with oil prices at multi-year highs and no diplomatic resolution in sight.