Fed Turns Hawkish, Spurs Surge in Rate Hike Bets | The China Show 6/18/2026

Watch on YouTube ↗  |  June 18, 2026 at 06:30  |  1:33:16  |  Bloomberg Markets
Speakers
Nancy Davis — Founder and CEO, Quadratic Capital Management
Mahjabeen Zaman — Head of FX Research, ANZ
Anthony Stevens — Bloomberg Market Producer
Tony Han — Founder & CEO, WeRide
Yvonne Man — Head of APAC, CoinDesk
Marcus Wong — Rates and Emerging Markets Macro Strategist, Bloomberg
Rob Kaplan — Vice-Chairman, Goldman Sachs

Summary

The China Show covers the Fed's hawkish policy turn under new Chair Kevin Warsh, including the dot plot signaling rate hikes, the market's reaction, and the implications for bonds, currencies, and equities. Guests provide actionable trading ideas ranging from long volatility and a curve steepener to a weaker dollar and long Aussie, plus long Asian semiconductors and WeRide. Other topics include the Iran peace deal, rare earths, PBOC liquidity tools, and upcoming emerging market central bank decisions.

  • Fed Chair Warsh drops forward guidance, appoints task forces, and the dot plot shifts hawkish.
  • Nancy Davis expects higher volatility and a Treasury curve steepener, seeing rate cuts not hikes.
  • Mahjabeen Zaman views peak hawkishness as priced, expects a weaker dollar and bullish Aussie.
  • Anthony Stevens highlights deep dispersion favoring AI/semiconductor supply chain in Asia.
  • Tony Han of WeRide touts strong revenue and global robotaxi expansion in Europe.
  • Iran peace deal signed, Strait of Hormuz expected to reopen, easing oil and geopolitical risk.
  • PBOC overnight reverse repo changes are for liquidity management, not a new policy rate framework.
  • Indonesia and Philippines expected to hike rates, but economists are sharply divided.
Ideas
Nancy Davis Founder and CEO, Quadratic Capital Management 16:31
Long volatility as guidance drops
With less forward guidance from the Fed and the new chair dropping forward guidance, market uncertainty will increase, driving higher volatility. This will hurt strategies that sell options or volatility, which have been popular for yield enhancement. She believes a lot of volatility-selling investors are in for a rude awakening.
VIX HIGH
Nancy Davis Founder and CEO, Quadratic Capital Management 17:54
Curve steepens as hike pricing unwinds
The market is wrong to price in imminent Fed rate hikes. With inflation under 2% on some measures and the new chair trying to build consensus, the Fed is more likely to cut rates later this year. As hike expectations unwind and the curve returns to a normal term premium, the Treasury yield curve will steepen (2s10s spread widening toward 100 bps).
US 2s10s Treasury curve steepener HIGH
Anthony Stevens Bloomberg Market Producer 49:03
Long Asian semis on AI demand
Equity markets are splitting into equities and 'techquities', with the semiconductor and AI supply chain decoupling from macro pressures. Asian semis in Korea and Taiwan, including opticals and chipmakers like SK hynix, are outperforming as AI demand drives the supply chain higher, and this dispersion is set to continue.
KS TSM MED
Mahjabeen Zaman Head of FX Research, ANZ 53:51
Peak hawkishness priced, dollar to weaken
Peak hawkishness from the Fed is already priced into the dollar, leaving limited further upside. The reopening of the Strait of Hormuz and lower oil prices will support energy-importing currencies, and the dollar is expected to weaken into year-end as the US exceptionalism story faces headwinds from low household savings.
US Dollar Index (DXY) MED
Mahjabeen Zaman Head of FX Research, ANZ 57:44
Long Aussie on carry and growth
The Australian dollar is attractive due to a carry advantage from three RBA rate hikes, and further support from a global growth recovery as the Iran war moves towards a resolution. Australia also benefits as a net energy exporter, making AUD a high-yield, risk-sensitive currency likely to outperform in a weaker-dollar environment.
AUD/USD MED
Tony Han Founder & CEO, WeRide 83:29
Bullish on WeRide revenue growth
WeRide is achieving strong revenue growth and is on track to meet its full-year 2026 revenue target of over $2.1 billion. The company is expanding globally (Madrid, Zürich, and planning 15 cities by 2030), has leading autonomous driving technology, and the stock price does not reflect the underlying progress, implying significant upside.
WeRide MED
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This Bloomberg Markets video, published June 18, 2026, features Nancy Davis, Anthony Stevens, Mahjabeen Zaman, Tony Han discussing VIX, US 2s10s Treasury curve steepener, KS, TSM, US Dollar Index (DXY), AUD/USD, WeRide. 6 trade ideas extracted by AI with direction and confidence scoring.

Speakers: Nancy Davis, Anthony Stevens, Mahjabeen Zaman, Tony Han  · Tickers: VIX, US 2s10s Treasury curve steepener, KS, TSM, US Dollar Index (DXY), AUD/USD, WeRide