Weekly Sentiment: Warsh's Hawkish Debut, Bitcoin Cracks $65K, Brent Below $77

The week closed with a clear split in risk appetite. US equities pushed higher on AI enthusiasm, with the Russell 2000 up 2.12% and the Nasdaq climbing 1.91% into Thursday's close, while bitcoin slid back toward $60,000 and crude broke down to multi-month lows. The cross-asset signal was not risk-on or risk-off in the traditional sense — it was a rotation, with capital crowding into a narrower AI-led equity trade while rate-sensitive and inflation-hedge assets bore the brunt of a hawkish reset out of Washington.

Three threads defined the week: Kevin Warsh's first FOMC meeting as Fed Chair, the unwinding of the geopolitical premium in oil following the US–Iran MOU, and a sharp decoupling between bitcoin and the technology complex it has historically tracked.

Warsh's First Meeting Reopens the Rate-Hike Conversation

The dominant macro story this week was the Federal Reserve's mid-week meeting, the first chaired by Kevin Warsh. The tone shift was immediate and material. Federal Reserve Chairman Kevin Warsh vowed to restore price stability following his first policy meeting since taking the helm of the central bank. Market commentary framed the messaging as a credibility-building exercise rather than a forecast, but the price action did not split that hair.

Rate-sensitive markets repriced quickly. The Treasury market saw a record surge in futures trading that underpins bets that the Federal Reserve's next move will be to boost interest rates. The long end moved with it: thirty-year Treasury yields will most likely push back over 5% by the end of the year, the latest Markets Pulse survey showed, signaling some doubts about whether the Federal Reserve will move quickly to enough rein in the recent inflation surge.

The dollar absorbed the hawkish read directly. The U.S. dollar headed Thursday for its highest close in more than a year, as investors continued to digest the Federal Reserve's Wednesday meeting, which revived the possibility of further interest-rate increases. USDJPY was a notable beneficiary, squeezing toward 2024 highs even as the Bank of Japan delivered its own rate hike this week — a reminder that relative policy paths, not absolute moves, drive currency flows.

The credit complex did not escape the repricing either. Hawkish signals from the Federal Reserve at Kevin Warsh's first meeting as chair arrived against a backdrop of historically tight credit spreads, raising the question of how much cushion lower-rated debt actually carries into a tightening narrative.

The Iran MOU Pulls the Premium Out of Crude

The second major thread was the formalisation of the US–Iran framework. President Donald Trump signed a preliminary deal with Iran late Wednesday while in France, putting terms of the 14-point agreement into effect two days earlier than expected. The Islamabad Memorandum of Understanding includes immediate cessation of military operations between the parties and their allies.

Crude's reaction was the cleanest expression of the de-escalation read. Brent crude fell below $77 per barrel on Thursday, the lowest level since the early part of the recent geopolitical cycle. The fundamental side of the market is signalling something different from the price tape: Oil traders have gone from pricing in the worst supply disruption in modern history to pricing in a recovery that hasn't happened yet. Inventory data suggests they're getting ahead of themselves.

Supply-side news added to the bearish set-up. The first new oil sands project in Alberta since 2014 has started commercial production, aiming for a daily average of 80,000 barrels once it ramps up. On the demand side, OPEC's annual outlook framed a long-term bull case that hinges on emerging markets: In its World Oil Outlook 2026, the producer group said global oil demand will climb from 105.1 million barrels per day in 2025 — with India, not Europe, carrying the load.

Bitcoin Decouples From The AI Equity Trade

The third thread was the most striking from a cross-asset perspective: bitcoin's break from the technology complex it has spent much of this cycle tracking. Bitcoin extended its slide back toward the $60,000 level. The decline is driven by mounting concerns over the unraveling of Strategy Inc.'s funding mechanism, alongside rate-hike fears that are dampening demand for riskier assets.

The rotation argument has now entered analyst commentary directly. Bitcoin's slump accelerated as capital rotated further into the AI sector, raising the odds of a BTC price drop below $60,000. Valuation work from sell-side desks framed the move as having gone far enough on a relative basis: Bitwise analysts say Bitcoin trades in a historical value zone, but hawkish Federal Reserve signals and a competition for liquidity could sideline buyers.

The mining side of the ecosystem felt the move acutely. JPMorgan's current estimated production cost of bitcoin is about $78,000, while bitcoin is currently trading around $62,500. That gap matters for the network's economics and for the listed miner cohort, several of which are now pivoting capacity toward AI data-centre workloads — a transition that itself requires significant capital. IREN leads public Bitcoin miners with a projected $21.1 billion AI infrastructure funding gap, underscoring the capital-intensive nature of converting mining sites into data centers.

On-chain composition is also shifting in ways worth flagging. Bitcoin transactions below 0.01 BTC now make up about 80% of all daily transactions, up from about 44% in 2023, CryptoQuant said. The microtransaction trend is a structural data point, not a near-term catalyst, but it changes how on-chain volume should be read.

The Nuclear–AI Energy Thread Builds Quietly

Running underneath the headline moves was a slower-burn theme that connected the AI equity bid to the energy complex. The Electric Reliability Council of Texas says data centers account for nearly 90% of the 438 GW of large-load demand in the state. European utilities and policy makers responded in kind this week, with Rolls-Royce SMR just added its third major European contract. Videberg Kraft, backed by Sweden's utility Vattenfall, selected the UK design for three units on the west coast, making it Sweden's first new nuclear plant in more than forty years.

This thread did not move headline indices on its own, but it shows up in sector dispersion and explains some of the relative performance gap between AI-adjacent industrials and the broader tape.

Looking Ahead

The Asia session into Friday's close carries two items worth watching. Japan's May CPI prints later in the session — headline and core measures have remained below the BoJ 2% target for four consecutive months, so any deviation will be read against this week's BoJ hike. In the UK, the Retail Sales print at 02:00 GMT+3 (forecast 0.5% m/m versus prior -1.3%) lands against a softening consumer-confidence backdrop where the sub-indices, rather than the headline, are doing the talking.

We will be tracking how cross-asset correlations behave into next week, particularly whether bitcoin's decoupling from the AI tape persists or proves to be a single-week dislocation. For traders reviewing positioning into the weekend, our research desk publishes daily session notes covering rate-driven flows, crude positioning, and crypto cross-asset signals.