QCP: Fed holds rates steady with a 10-2 vote; Binance incident intensifies market repricing

October 30 — QCP noted in its latest market report that the Federal Reserve, the European Central Bank, and the Bank of Japan all kept interest rates unchanged this week, but the market is still betting that the ECB and BOJ may raise rates in December. At its October meeting, the Federal Reserve voted 10 to 2 to keep the federal funds rate in the 3.75% to 4.00% range. Fed Chair Warsh made no commitment to rate adjustments in December or beyond.

In addition, the Federal Reserve announced that one meeting in 2027 and two meetings in 2028 will not hold rate votes and will be used only to discuss monetary policy strategy. QCP believes that fewer decision points may allow more economic data to accumulate between two meetings, making the market more sensitive to data changes and increasing interest rate volatility and term premiums. The European Central Bank kept rates unchanged on the grounds that previous inflation data had not yet produced second-round effects, but the market still expects it may raise rates in December. The Bank of Japan also kept rates unchanged and said inflation has reached its 2% target, and the market is also pricing the possibility of a December rate hike.

On tech stocks, Alphabet, Amazon, Meta, and Intel all saw share price declines after reporting quarterly results, with the market worried about companies' current earnings performance and future capital expenditure plans, especially the pace of expansion and profitability of AI infrastructure investment. In the crypto market, Binance suffered a major security incident on Friday morning, with about $6.3 billion in assets affected, and the incident initially led to a decline in trading activity in the crypto market.

However, QCP noted that the market gradually stabilized afterward, and participants appeared to view the incident as a company-level risk rather than a systemic event affecting the entire crypto market or infrastructure. QCP concluded that central bank policy uncertainty, concerns about tech companies' capital allocation, and the Binance security incident jointly drove market repricing. Going forward, the market will focus more on economic data released between two rate decisions, as well as tech companies' guidance on AI infrastructure capital expenditure and expected returns.