WS #10045

The dominant signal in this window is the Federal Reserve's first meeting under new Chair Kevin Warsh, which delivered a hawkish hold at 3.5%-3.75% with a clear pivot toward potential rate hikes. Nine of 18 FOMC participants now project at least one rate hike in 2026, and the statement removed language hinting at future rate cuts. Warsh's press conference reinforced this hawkish tone: he dropped forward guidance, said the Fed will not revisit the 2% inflation target until it is achieved, and established five task forces to review communications, the balance sheet, data, productivity, and the inflation framework. Treasury yields leaped and gold pared gains as markets repriced rate expectations. Separately, the US-Iran draft agreement was leaked, revealing a $300 billion reconstruction fund for Iran in exchange for reopening the Strait of Hormuz and a 60-day delay on nuclear talks. This counters the prevailing oil supply crisis narrative by potentially restoring Middle East supply, but the massive fiscal transfer raises questions about US fiscal discipline. The MAG7 narrative shows divergence: META was down 4% while semiconductor stocks (MU, AMAT, LRCX) saw analyst upgrades and dark pool buying, suggesting rotation out of mega-cap tech into semis. The Fed's hawkish shift is the primary market-moving event, with second-order effects on growth stocks (bearish), financials (bullish), and REITs (bearish). The Iran deal counters the oil supply thesis but introduces fiscal uncertainty.