Recent market moves are reversing in early trading, with stocks up, gold and silver climbing, and crude oil dipping. Treasuries are also trading slightly higher, while the dollar is flat.
It’s Fed Day in Washington – and markets are expecting Federal Reserve Chair Kevin Warsh to raise interest rates by 25 basis points. That would be the first time the Fed has hiked rates since 2023. It would leave the federal funds rate in a new range of 3.75% - 4%.
Interest rate markets are also pricing in a couple more increases through mid-2027, as you can see in the chart of swaps prices from Bloomberg below. Keep in mind that the farther out in time you go, the fuzzier the projections get. Economic, geopolitical, and market developments between now and then can and will affect expectations and derivatives prices.
Expected Fed Interest Rate Policy Path 2026 - 2028
Source: Bloomberg
OpenAI is reportedly looking to raise more money in a private funding round that could value the ChatGPT maker at up to $1.2 trillion. Its valuation climbed to $852 billion in its last fundraising in March. While the firm was originally expected to go public this year, CEO Sam Altman recently suggested it will wait until 2027 to launch its Initial Public Offering (IPO). That would allow the firm to focus on improving model safety amid enhanced government and industry scrutiny.
Finally, cryptocurrencies and crypto-levered stocks dropped yesterday after key legislation got derailed in Washington. The crypto industry has been advocating for the Clarity Act, a bill that would make the Commodity Futures Trading Commission (CFTC) the primary regulator for digital assets. The legislation would also clarify other federal oversight issues, establish guardrails that apply to elected officials, and restrict the rewards and yields firms could offer on stablecoins.
The procedural vote failure in the Senate doesn’t mean the bill is dead for good. But it won’t move forward anytime soon, especially with midterm elections looming in November. Bitcoin slid toward the $75,000 level on the news before rebounding a bit, while Coinbase Global Inc. (COIN) dropped 10.1%.
