Many partners are asking why US stocks are not falling today, but gold, silver, and Bitcoin, as well as US Treasury bonds, are all declining??

First of all, US stocks are also falling today, just not as obviously, but there are still concerns about Micron's financial report. Of course, the main focus today is not on US stocks.

Starting tonight, the market has been worried that the Federal Reserve will raise interest rates three times before March 2027, so there are concerns that some risk-averse actions will be taken, with gold and silver being the first to feel the impact.

The primary reason for this is the expectation of a rate hike, which has caused the DXY, or the US dollar index, to start rising. The dollar's interest rates will become more advantageous, so when the expectation is that the dollar will strengthen, some investors will sell the gold and silver that have already risen quite well and turn to buy bonds in search of more stable returns.

Thus, today in the bond market, it's clear that yields are decreasing because a large number of investors are buying bonds. The reason for buying is the concern that the Federal Reserve will raise interest rates, which could lead to a downturn in the risk market, so almost risk-free, and relatively high-yielding bonds become the best “safe haven.”

Therefore, selling gold, silver, and even Bitcoin fundamentally stems from concerns about interest rate hikes, while buying US Treasury bonds also reflects similar concerns regarding rate hikes.

Now, here's the complex part — many may say, didn't the conflict between the US and Iran end, and WTI prices fell below $70 during this phase? Shouldn't this be beneficial for US inflation to decrease? Why do some people believe that the Federal Reserve will not only raise rates but also have such a hawkish expectation (three times)?

Because even though Iran has opened the Strait of Hormuz, it will still take some time for the declining oil prices to transmit to goods and services, let alone the fact that it will take several months to completely open the Strait of Hormuz. Therefore, many investors are still concerned that rising inflation will force the Federal Reserve to choose to raise interest rates, even if oil prices have already fallen.

So, the critical question is, is today's decline the beginning of a continuous collapse?

Here, I only represent my personal views, and my views may not be correct.

If, as everyone analyzes, today's decline is due to market concerns about the possibility of the Federal Reserve raising rates, then this worry's catalyst may be the core PCE data to be released tomorrow.

Therefore, I also believe that today's decline is a hedge against tomorrow's core PCE data; everyone knows that the most important data for the Federal Reserve is the core PCE. Although energy is not included in core PCE, the impact of energy is widespread. Consequently, market expectations indicate that the annual rate of the core PCE has risen from 3.3% to 3.4%, and the monthly rate has risen from 0.5% to 0.6%, meaning that the market expects core inflation to be rising.

Not to mention that the broad PCE expectation has reached 4.1%, so the market's most direct concern is that rising inflation will make the Federal Reserve more hawkish. Even if the Federal Reserve does not raise rates, hawkish statements and market intimidation are still possible.

Thus, the current key trends are two-fold:

One is that tomorrow's core PCE is expected to meet or fall short of expectations; then the market will be reassured about inflation. After all, the war has stopped, oil prices are close to recovery, and the market will likely rebound. The market will estimate that the Federal Reserve will not be so hawkish.

The other is that tomorrow's core PCE exceeds expectations; the higher it goes, the stronger the market's risk-averse sentiment will be, and the market will believe the Federal Reserve is more likely to raise rates. To put it simply, if the data for core PCE is too high tomorrow, there may be a continued decline.

Although it hasn't happened yet, I believe that raising rates is not currently an option for the Federal Reserve, especially since the war between the US and Iran has ended. Oil prices have only risen by $5 from pre-war averages, and the average oil price in 2025 is around $70. Thus, even current oil prices will not continue to stimulate US or global inflation.

The market's concern primarily revolves around the expectations from US banks, but I feel that this expectation is not necessarily certain to happen. Even if we look at June's dot plot, we can see that indeed nine Federal Reserve officials chose the possibility of a rate hike, but still, eight officials chose to hold steady, and one Federal Reserve official even chose to cut rates.

We won't discuss rate cuts; this shows that even within the Federal Reserve, there is no unanimity. If including Waller in the count against rate hikes, it is not an advantage, and that was under the condition that the US and Iran had not completely ended their war. Now that the agreement has been signed and oil prices have dropped, I can assert that the number of Federal Reserve officials still opting for rate hikes is probably decreasing. This means that the possibility of a rate hike at least under current circumstances remains very low.

If my assumption is correct, then Bitcoin's decline is likely driven by sentiment; as long as the expectation for rate hikes diminishes, the possibility of a rebound in Bitcoin will increase.

Unfortunately, aside from the core PCE data being released tomorrow, the only other thing that might lower the likelihood of rate hikes is whether Federal Reserve officials will come out to reassure the market.

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