A divided Federal Reserve stood pat on Thursday, and the silence on what comes next sent long-term bond yields to levels not seen in nearly 20 years.

Asian markets swung wildly overnight as investors tried to make sense of a central bank that raised more questions than it answered. Oil hovered near $90 a barrel. Chip stocks stayed shaky. Nobody seemed sure which way to move.

What happened

Fed Chair Kevin Warsh held rates steady but offered no roadmap for what’s ahead. He pointed to rising bond yields as proof the market was already doing the Fed’s job – a comment that left more questions than comfort. Thirty-year Treasury yields touched 5.2273%, their highest since June 2007, before settling near 5.2039%.

Traders now price in roughly a 60% chance of a rate hike come September, with 33 basis points of tightening expected by year’s end.

Market reaction

Japan’s Nikkei climbed 1.2% but is still down 3.7% for the week. South Korea’s KOSPI slid 0.6%, dragging its weekly loss to 15% after a leveraged-ETF selloff wiped out more than $2 trillion in value. Samsung’s profit jumped nineteenfold, offering a rare bright spot. Microsoft shares rose on reassurances about cash flow, while Meta dropped after free cash flow collapsed 91%.

Why it matters

When a Fed chair won’t commit to a direction, markets are forced to price in every possibility at once, and that’s exactly the kind of volatility traders can turn into opportunity.

What to watch

Retail margin balances in Korea and Taiwan, plus any fresh signals from the Fed on where rates go from here.

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Source: Reuters