U.S.-Iran Risk Sparks Surge, Crude Oil Rises Over 4%! Federal Reserve Meeting Minutes Reveal Rate Cuts and Hikes Mentioned Simultaneously, Internal Disagreements Rarely Worsen

On February 19th Beijing time, the three major U.S. stock indices closed higher collectively, with the Nasdaq up 0.78%, the S&P 500 up 0.56%, and the Dow Jones up 0.26%.

Large-cap technology stocks mostly rose, with Nvidia and Amazon gaining over 1%, and Apple, Tesla, Meta, and Microsoft rising slightly.

Google saw a slight increase. Alphabet’s Google launched its latest entry-level Pixel 10a smartphone on Wednesday, aiming to offset the relatively minor upgrade with new AI software features, slight hardware improvements, and maintaining the price at $499.

Storage concept stocks strengthened, with chip giant Micron Technology rising over 5% and Western Digital up over 4%.

In the Chinese concept stocks, the Nasdaq Golden Dragon China Index fell 0.04% to 7,580.87 points. WeRide dropped about 4%, Xiaopeng Motors fell nearly 0.9%, Li Auto declined 0.4%, NIO decreased 0.2%, XPeng Motors and GDS Holdings fell 0.1%. Pinduoduo rose over 1%, Baidu increased nearly 0.4%, and Alibaba gained over 0.2%.

International crude oil futures settled significantly higher, up over 4%. WTI March futures rose 4.59% to $65.19 per barrel; Brent April futures increased 4.35% to $70.35 per barrel.

The risk of U.S. military action against Iran has increased. According to CCTV International News, on February 18 local time, CNN reported that sources revealed U.S. military forces are prepared to launch a military strike against Iran as early as this weekend, but President Trump has not yet made a final decision.

Sources said the White House has been informed that after a significant troop buildup in the Middle East in recent days, the military is ready to attack over the weekend. Trump has privately debated the pros and cons of military action and consulted advisors and allies on the best course of action—it’s unclear whether he will make a decision before the weekend.

According to CCTV News, on February 18 local time, senior Israeli officials stated that “the timetable for U.S. military strikes on Iran is shortening.” Due to the lack of substantive progress in new U.S.-Iran negotiations, Israel assesses that President Trump is very likely to approve an attack plan soon.

The latest Federal Reserve meeting minutes released again reveal significant disagreements among policymakers about the future direction of interest rates. Besides the dovish and wait-and-see factions, the minutes also explicitly mention discussions about the possibility of rate hikes. This reflects that, amid inflation remaining above the Fed’s 2% target and the economy staying resilient, the Fed’s policy focus has shifted back to inflation risks rather than employment slowdown.

The minutes from the January 31 FOMC meeting, released on Wednesday, show that “several” participants supported using a “dual” language in the forward guidance on interest rates to reflect that “if inflation remains above the target level, it may be appropriate” to raise rates. This wording indicates that some officials are increasingly concerned about inflation stickiness.

Other “several” participants believe that if inflation declines as expected, further rate cuts may be appropriate. Most participants warned that the process of inflation returning to 2% could be “slower and more uneven” than generally anticipated. The vast majority of attendees judged that recent employment risks have eased, but the risk of more persistent inflation remains.

The term “several” appears multiple times in the minutes, highlighting the degree of disagreement within the FOMC. After the November meeting minutes, which exposed internal divisions at the Fed, media and reporters like Nick Timiraos, known as the “New Fed Correspondent,” pointed out that in the Fed’s language, the number of representatives supporting many (Many) was less than most (Most), but more than several (Several).

Following the release of the minutes, U.S. Treasury bond prices declined further, the dollar index rose, and non-U.S. currencies such as the pound and yen, as well as cryptocurrencies like Bitcoin, further fell.

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(Source: Daily Economic News)