Fed's First Hike Since 2023 Meets Calm Bonds and a Bitcoin Short Squeeze Past $81,000

Thursday's session was dominated by a Federal Reserve move few had priced in: incoming chair Kevin Warsh raised the benchmark rate for the first time since 2023, arguing the increase keeps the central bank on track for 2% inflation by 2029. Bond markets took the move calmly, a sign that investors read the hike as a credible inflation fight rather than a policy mistake. Bitcoin's reaction ran the other way. The largest cryptocurrency climbed above $81,000 as a short squeeze took hold — traders who had bet on falling prices were forced to buy back their positions as the price rose, and that buying pushed the price higher still. The squeeze overpowered both the rate hike and a separate regulatory setback in the same session, with crypto analysts describing coins as having "weathered" both shocks at once, an unusual show of resilience given that higher rates normally make non-yielding assets like bitcoin less attractive to hold. Equities were more guarded than crypto. Deutsche Bank flagged cautious positioning among investors even as major indexes held their ground, and the S&P 500 edged lower for a second straight week. Bank of America warned that the rate rise threatens holiday spending, since a higher benchmark rate raises the cost of credit cards and consumer loans just as retailers enter their busiest quarter. Homebuilder Lennar added to that caution, reporting that a "deteriorated" housing market hit its earnings — a reminder that housing, the part of the economy most sensitive to borrowing costs, was already under strain before Thursday's hike pushed those costs higher still. Stress also surfaced in private credit. Morgan Stanley gated one of its private credit funds for a second time, restricting withdrawals after 11% of investors asked to redeem their money. A gate is a formal limit on redemptions, used when a fund cannot sell its holdings fast enough to pay departing investors without disrupting everyone left in the portfolio; a second gating on the same fund signals the redemption pressure has not eased since the first one was imposed. The AI trade split further apart on the earnings side. Applied Materials, a supplier of chipmaking equipment, posted AI-related revenue growth that trailed both Broadcom and Intel, underlining that the AI capital-spending boom is not lifting every chip supplier at the same pace. Corporate news layered on top without moving the broader tape much. Warren Buffett stepped down as Berkshire Hathaway's chairman, though the investment case was described as intact beyond the personnel change. Best Buy's chairman emeritus sold 300,000 shares for $27.8 million as the stock rallied, insider selling that stood in contrast to a Star Bulk director's $2.1 million purchase, which lifted his stake to near $99 million. Paramount moved toward settling its lawsuit over the Warner Bros. Discovery deal. A fair-value screen also showed how far apart valuation models can run on the same market: GeoPark was flagged as 67% undervalued while Sterling Infrastructure was flagged as 40% overvalued. The split between crypto strength and equity caution showed up directly in the Buy List 2026 model portfolio, which holds a fixed set of positions bought with €110,000 now worth €116,466, a total return of 5.88% once dividends are counted, against a 5.27% price-only gain. MicroStrategy, whose balance sheet is built around bitcoin holdings, was the single best performer at +59.30%, and Maersk added 31.82%, while Vonovia lagged at -26.43% and Tesla was down 10.55% — a spread that mirrors the session's divide between assets tied to the bitcoin rally and assets more exposed to rates and consumer spending. What remains unresolved heading into the next session is whether bond markets keep taking the rate increase calmly if coming inflation data disagree with Warsh's 2029 target, whether the Morgan Stanley gating is an isolated liquidity problem or the first sign of broader private-credit strain, and whether Applied Materials closes the AI revenue gap with Broadcom and Intel or falls further behind. The next inflation print, any further redemption requests at private credit funds, and the next round of chipmaker earnings should start to answer those questions.