Wealthion Macro Bites – The Fed Just Raised Rates for the First Time in Three Years

The Warsh Fed took a hawkish turn at its 9/15-9/16 FOMC meeting by voting unanimously to raise the fed funds rate 25bps to a target range of 3.75%-4.00%, its first interest rate hike in three years.  Further, the Fed's updated SEP dot plot revealed a "higher-for-longer" stance, with 16 out of 18 officials (Chair Warsh once again declined to submit a forecast) projecting at least one more rate hike by end-’26.

Hong Kong’s first five-year economic and social plan (released alongside H.K. Chief Executive John Lee’s Wednesday policy address to the H.K Legislative Council) details a massive, coordinated strategy to transform the city into an international hub for gold and industrial commodities.  Hong Kong’s plan to build a global gold hub will provide “an entry point” for trading other commodities and expanding the yuan’s usage in world markets.

Hong Kong will “fully leverage the role of gold as a strategic asset” by developing a one-stop gateway for storage, trading and clearing the precious metal and further developing mutual access with mainland gold markets (Shanghai Gold Exchange and Shanghai Futures Exchange) to increase the variety of yuan-denominated products.  Hong Kong’s role in the London Metal Exchange’s global warehousing network for base metals will also help drive more commodities trading, risk management, and financing.

China’s Automotive Battery Innovation Alliance said Tuesday that domestic EV battery installations in Aug. ’26 hit a ytd high of 79.0GWh, marking a 26.3% y/y increase and a 5.9% m/m increase. Lithium iron phosphate (LFP) batteries continued to drive industry growth with August installations reaching 67.6GWh in August (+31.0% y/y and +7.0% m/m) accounting for 85.6% of the total. Conversely, higher-cost ternary battery installations declined for the third month in a row.  The latest monthly figures highlight an intensifying battle between China's top tier battery manufacturers and a record-breaking shift toward lower-cost chemistries.

Shell said the Mid East conflict has cost the world 36Mt of LNG (equal to total ’25 U.K. and France imports) as well as 1.6B barrels of crude oil and condensates (16 days of global production).  Much of the impact had been offset by weaker demand from China, inventory drawdowns, flexible shipping capacity, spare pipeline capacity and rising output from the Americas.  Shell warned, “But those shock absorbers are weakening.”

Hamburg based solar developer Enerparc (one of Europe’s largest solar park operators) filed for insolvency this month with around EUR3B of debt.  This follows the insolvency of wind developer Sowitec, while others have embarked on restructuring efforts.  These difficulties mark a reversal for an industry that expanded rapidly on cheap financing and government subsidies.  Economics are deteriorating as the intermittency means more of the higher capacity has to be dumped.

Venezuela is preparing to ship aluminum to the U.S. for the first time in years under a deal with Mercuria Energy and Heeney Capital (with Heeney also planning to invest in a Venezuela gold mine).  The first shipment will total 15kt and is scheduled to leave Venezuela as soon as Friday.

AI watch: OpenAI shared several undisclosed incidents of its AI models misbehaving and unveiled a new framework for tracking and disclosing such occurrences going forward.  Some of the previously unreported instances included OpenAI’s technologies concealing and fabricating information in order to return results.  The ChatGPT maker has faced increased scrutiny since saying in July that some of its most advanced AI models had breached the systems of an external software company, Hugging Face.