The Fed hiked for the first time in three years and the ten year, which prices everything that matters, finished the day where it started. Good morning and welcome to today's market chronicle. It's Thursday, September 17, 2026.
The committee went a quarter point, twelve to nothing, top of the range four percent. The S&P lost not quite half a percent, the Nasdaq finished flat to a hundredth, and the Dow dropped 631 points, which is the story. Financials took most of it, because the Fed raised the price of the money banks borrow and the market declined to raise the price of the money banks lend.
Five percent on the ten year was there on Monday and it is there this morning. It sits there because crude is north of a hundred, because the deficit is the deficit, because there is a great deal of paper to sell. None of that consults the overnight rate. Against the yields that set mortgages and corporate refinancing, yesterday tightened nothing, and the bill went to lenders' margins. Sixteen of eighteen participants want one more hike this year, none want any in 2027, and somebody penciled a cut into 2028.
Warsh took questions for twenty-two minutes and the whole thing was done inside half an hour, brisk for a first hike in three years. I watched it at half past eight Geneva time and it ended before I had worked out what I thought. The plain fact is inflation is too high, he said, and promised a timelier return to two percent. Futures spent the night going up. Not on the rate, on the sentence.
July 2008. Trichet took the ECB up a quarter point into crude at a hundred and forty-five, talking about second round effects and anchored expectations, this vocabulary more or less. I was in this chair and I thought he was right. He was cutting by October. I do not think that is this. The demand side in 2008 was already dead and nobody had told the central bank, and Warsh has no Lehman three months out, though neither did anyone else that July.
Housing starts and permits before the bell, expected a shade under last month's 1.43 million, then claims, the Philadelphia Fed survey and pending home sales. Housing at a five percent ten year is the more interesting question, and it gets nine minutes today, because the committee spoke yesterday and everyone has filed.
We closed Las Vegas Sands (LVS) yesterday on the stop. In on August 18 at 45.65, out at 41.06, down about ten percent over twenty sessions against an S&P off under two, eight points of relative. The close went through 41.23, ten percent under entry, and that exit is automatic rather than a judgement. The thesis was that Macau's soft summer was a typhoon and a football tournament rather than a Chinese consumer stepping back. I did not get to find out which.
Gold around 4,338 an ounce, WTI between 101 and 102 depending on the screen, Brent above 107, Bitcoin near 77,500, the ten year at 5.01 percent, S&P futures up about three tenths. Gold went up on the day the central bank got serious about inflation.
The front end moved yesterday. That was the easy part.
Have a good one.
Salomon