The structural fragments of the 2026 macroeconomic landscape are officially falling into place. We are facing a full-blown inflationary surge: U.S. CPI remains at 3.8% (the highest since May 2023), the latest PPI has surged to 6%, international oil prices have broken through the $100-per-barrel threshold, and geopolitical tensions have brought the Strait of Hormuz to the brink of eruption.
However, the largest macro regime change occurred last Friday, May 22—Kevin Warsh was officially sworn in as the 17th Chair of the Federal Reserve, with President Trump personally presiding over the highly anticipated ceremony.
Although today marks the first full workweek since Wash took office, the bond market didn’t wait for his opening remarks—it launched a hostile takeover of the Federal Reserve. The U.S. 30-year Treasury yield has surged past the 5% mark, reaching levels unseen since the financial crisis; the 2-year yield has also broken through the Fed’s own policy rate ceiling.
The bond market has sent a deafening signal to the new Fed chair: “You’re already behind the curve. Either you catch up yourself, or we’ll force you to.” As one quantitative strategist noted, before Wash even had the chance to hold his first FOMC meeting, the market had already fully priced in the expectation of his first rate hike.
Dr. Andy Cheung, founder of Zeuspace and investor in the UK's CBCX exchange, shares his latest insights, providing a comprehensive macro strategy guide for navigating the current "hawkish trap" with regard to gold, Bitcoin, and AI-themed stocks.
Gold: The Anchoring Pillar in a Monkey Market
Historically, gold has been called the "anchor of the sea" — intended to stabilize the wildly volatile "monkey market." But now, gold's price movements resemble those of a heavyweight boxer, swinging wildly: soaring one day due to geopolitical fears, then plunging the next as the dollar strengthens.
In Dr. Andy's view, gold is caught between two entirely opposing structural narratives:
Surge in institutional demand: Inflows into China’s gold ETFs are experiencing explosive growth.
Weak consumer demand: Physical gold jewelry consumption in China declined by 30% year-over-year last quarter.
This means people are buying gold not to wear, but to hold. Financial demand is rising, while consumer demand is shrinking.
“Buying gold is for hedging, not for quick profits,” Dr. Andy advised. “If you look at a 3- to 5-year horizon, allocating to gold is very hard to lose money on, because fiscal deficits won’t disappear, the risk of dollar depreciation remains, and global geopolitical turmoil shows no sign of cooling in the short term.”
Bitcoin: The First Casualty of the Fed's Hawkish Shift
When it comes to rate cuts—more accurately, the complete collapse of expectations for rate cuts.
Just a few weeks ago, Bitcoin traders were popping champagne corks. On May 6, BTC briefly reclaimed the $80,000 level, reaching a local high of $82,800. At the time, ETF funds had seen six consecutive weeks of net inflows, and the Clarity Act was making smooth progress in the Senate.
However, when stubborn inflation realities collided with the Fed’s hawkish shift, market conditions shifted dramatically. Bitcoin plummeted below $77,000 in a single trading day, erasing nearly $900 million in market value.
The underlying mathematical logic here is brutal. The U.S. 30-year Treasury yield is currently holding firmly above 5.1%, signaling a fundamental shift in the overall macro environment. When risk-free interest rates in the market can reliably deliver returns above 5%, the opportunity cost of holding volatile assets like Bitcoin— which generate no dividends— becomes extremely high. Dr. Andy refers to this as the “opportunity cost trap,” and Bitcoin is now deeply caught in it.
Currently, derivatives market pricing shows that the probability of the Fed raising rates again before December 2026 has surged to 60%. And the probability of a rate cut this year? It has effectively dropped to zero.
The paradox of AI-themed stocks: enjoy the bubble, but “buy and sell quickly”
This brings us to the colossal forces in the macro market that cannot be ignored: tech giants and the AI sector.
Nvidia's latest Q1 financial report should have been the most explosive in the company's history:
First-quarter revenue reached $81.6 billion, significantly exceeding the market expectation of $75.2 billion, an 85% year-over-year increase.
Net profit: Earnings per share of $1.87 (expected $1.77).
Next quarter's guidance: Expected to reach $9.1 billion—another all-time high.
Capital return: Announced a massive share repurchase program of up to $80 billion.
If this had happened in 2024, NVIDIA's stock would have surged 20% after hours. But in reality, it dipped slightly after the earnings report. The market’s message couldn’t be clearer: Wall Street is no longer asking “How big is the data?”, but rather “How much further can this data stretch growth expectations?”
“Wall Street has developed a drug dependency on ‘unlimited upside,’ ” Dr. Andy pointed out. “But when a company’s single-quarter revenue is already approaching $80 billion, maintaining past exponential growth… is mathematically extremely challenging.”
This is the ultimate paradox of the AI bubble. Underlying demand for computing power remains insane, with supergiants like Microsoft, Amazon, Google, Meta, and OpenAI continuing to procure GPUs at an unprecedented pace. The entire industry has structurally shifted from the “training era” to the “inference era”—and inference is proving to be an even deeper black hole for computing resources. Geopolitical uncertainties
Amid the volatile fluctuations of the financial markets, the recent trade developments between China and the United States remain a critical unknown to closely monitor.
Previous trade preparatory talks held in Korea yielded unexpectedly balanced outcomes, including reciprocal tariff reductions on $30 billion worth of goods, China’s confirmation of purchasing 200 Boeing aircraft, and clarification of compliant supply for civilian rare earth processing.
However, how long can this mild "pause" last in the face of a newly appointed Federal Reserve pushed into a hawkish corner by the bond market and a more assertive U.S. government? Dr. Andy remains deeply skeptical.
The macro trend of globalization reversal is irreversible. Trade barriers, nationalism, and populism are all on the rise. Under this structural backdrop, expecting long-term stable development in Sino-U.S. relations is unrealistic. There are only so many chips on the table, and the systemic pressures disrupting the internal balance are simply too great.
As May 2026 draws to a close, the market is being forced to adapt to a new reality. Amid pressure from bond markets pushing Fed Chair Kevin Warsh into a corner with hawkish moves, impending growth bottlenecks in the AI sector, and shifting global trade winds, this summer is set to become a period of extremely high volatility.
In this market, the only rule for survival is capital preservation. At this stage, prioritize defense and conserve your resources.
Mean reversion is not only a fundamental law of financial markets, but also an unbreakable aspect of human nature. When liquidity eventually shifts camps, you must ensure that you are the one holding cash ready to deploy.