Bitunix Analyst: Iran Stalemate Elevates Energy Risks, Fed Rate Hike Expectations Intertwine with US Election Pressures

October 21 - The policy challenges facing the United States are no longer limited to inflation, but also involve Middle East energy supply and domestic political pressure. Iran refuses to resume negotiations until the US meets seven conditions, demanding the lifting of port blockades and oil sanctions, cessation of regional hostile actions, and insisting on retaining control over the Strait of Hormuz. Tehran intends to prolong the deadlock until the US midterm elections on November 3, using high oil prices and shipping disruptions to increase the political cost for the White House. Meanwhile, Trump envoy Barak stated that the US will no longer indefinitely bear the responsibility of Gulf security guarantees; even as US forces continue to build up, this means regional allies may need to share more defense responsibilities, and energy supply risks are therefore not just short-term conflict premiums but also involve long-term changes in the Middle East security order.

Interest rate expectations have also turned hawkish. In a Reuters survey, 94 economists expect the Federal Reserve to keep rates at 3.75% to 4.00% at its October 27-28 meeting, but all 100 respondents expect another rate hike in December, with nearly 60% estimating rates could rise to 4.00% to 4.25%. US economic growth remains resilient, AI investment supports demand, and energy and tariff costs may prolong the time needed for inflation to fall, so a pause in rate hikes does not equal a policy shift toward easing. Trump proposed $8 billion in farmer aid and cash subsidy ideas, which, while attempting to ease cost-of-living pressures, also face questions that fiscal spending and demand stimulus could affect inflation.

However, stock market signals are not uniformly pessimistic. The S&P 500 is still only about 1.6% below its historical high, while the Philadelphia Semiconductor Index has fallen about 14% since October 6; contrarian buy signals from Goldman Sachs and Wells Fargo reflect that market sentiment has clearly cooled, but do not mean risks have been eliminated. The follow-up focus is whether the energy shock continues to push up prices, whether the Federal Reserve therefore maintains higher interest rates, and whether AI capital expenditure can translate into sustainable profits. If these conditions come under pressure simultaneously, the market may face not just a valuation correction, but a rebalancing of growth expectations, financing costs, and capital allocation.