diff --git a/compiler/forget/src/Inference/InferReferenceEffects.ts b/compiler/forget/src/Inference/InferReferenceEffects.ts
index 0a35a12c91..b0a4bc44bd 100644
--- a/compiler/forget/src/Inference/InferReferenceEffects.ts
+++ b/compiler/forget/src/Inference/InferReferenceEffects.ts
@@ -584,7 +584,10 @@ function inferBlock(env: Environment, block: BasicBlock) {
         break;
       }
       case "ObjectExpression": {
-        valueKind = ValueKind.Mutable;
+        valueKind = hasContextRefOperand(env, instrValue)
+          ? ValueKind.Context
+          : ValueKind.Mutable;
+
         // Object construction captures but does not modify the key/property values
         effectKind = Effect.Capture;
         lvalueEffect = Effect.Store;
@@ -843,3 +846,10 @@ export function parseHookCall(place: Place): Hook | null {
     valueKind: ValueKind.Mutable,
   };
 }
+
+function hasContextRefOperand(env: Environment, instrValue: InstructionValue) {
+  for (const place of eachInstructionValueOperand(instrValue)) {
+    if (env.kind(place) === ValueKind.Context) return true;
+  }
+  return false;
+}
diff --git a/compiler/forget/src/__tests__/fixtures/hir/capturing-fun-alias-captured-mutate-2.expect.md b/compiler/forget/src/__tests__/fixtures/hir/capturing-fun-alias-captured-mutate-2.expect.md
new file mode 100644
index 0000000000..d36325ba83
--- /dev/null
+++ b/compiler/forget/src/__tests__/fixtures/hir/capturing-fun-alias-captured-mutate-2.expect.md
@@ -0,0 +1,46 @@
+
+## Input
+
+```javascript
+function component(foo, bar) {
+  let x = { foo };
+  let y = { bar };
+  (function () {
+    let a = { y };
+    let b = x;
+    a.x = b;
+  })();
+  mutate(y);
+  return x;
+}
+
+```
+
+## Code
+
+```javascript
+function component(foo, bar) {
+  const $ = React.unstable_useMemoCache();
+  const c_0 = $[0] !== foo;
+  const c_1 = $[1] !== bar;
+  let x;
+  if (c_0 || c_1) {
+    x = { foo: foo };
+    const y = { bar: bar };
+    (function () {
+      let a = { y };
+      let b = x;
+      a.x = b;
+    })();
+    mutate(y);
+    $[0] = foo;
+    $[1] = bar;
+    $[2] = x;
+  } else {
+    x = $[2];
+  }
+  return x;
+}
+
+```
+      
\ No newline at end of file
diff --git a/compiler/forget/src/__tests__/fixtures/hir/capturing-fun-alias-captured-mutate-2.js b/compiler/forget/src/__tests__/fixtures/hir/capturing-fun-alias-captured-mutate-2.js
new file mode 100644
index 0000000000..d00593e420
--- /dev/null
+++ b/compiler/forget/src/__tests__/fixtures/hir/capturing-fun-alias-captured-mutate-2.js
@@ -0,0 +1,11 @@
+function component(foo, bar) {
+  let x = { foo };
+  let y = { bar };
+  (function () {
+    let a = { y };
+    let b = x;
+    a.x = b;
+  })();
+  mutate(y);
+  return x;
+}
diff --git a/compiler/forget/src/__tests__/fixtures/hir/capturing-func-alias-captured-mutate.expect.md b/compiler/forget/src/__tests__/fixtures/hir/capturing-func-alias-captured-mutate.expect.md
new file mode 100644
index 0000000000..2754e3a266
--- /dev/null
+++ b/compiler/forget/src/__tests__/fixtures/hir/capturing-func-alias-captured-mutate.expect.md
@@ -0,0 +1,46 @@
+
+## Input
+
+```javascript
+function component(foo, bar) {
+  let x = { foo };
+  let y = { bar };
+  (function () {
+    let a = { y };
+    let b = x;
+    a.x = b;
+  })();
+  mutate(y);
+  return y;
+}
+
+```
+
+## Code
+
+```javascript
+function component(foo, bar) {
+  const $ = React.unstable_useMemoCache();
+  const c_0 = $[0] !== foo;
+  const c_1 = $[1] !== bar;
+  let y;
+  if (c_0 || c_1) {
+    const x = { foo: foo };
+    y = { bar: bar };
+    (function () {
+      let a = { y };
+      let b = x;
+      a.x = b;
+    })();
+    mutate(y);
+    $[0] = foo;
+    $[1] = bar;
+    $[2] = y;
+  } else {
+    y = $[2];
+  }
+  return y;
+}
+
+```
+      
\ No newline at end of file
diff --git a/compiler/forget/src/__tests__/fixtures/hir/capturing-func-alias-captured-mutate.js b/compiler/forget/src/__tests__/fixtures/hir/capturing-func-alias-captured-mutate.js
new file mode 100644
index 0000000000..fc1954b554
--- /dev/null
+++ b/compiler/forget/src/__tests__/fixtures/hir/capturing-func-alias-captured-mutate.js
@@ -0,0 +1,11 @@
+function component(foo, bar) {
+  let x = { foo };
+  let y = { bar };
+  (function () {
+    let a = { y };
+    let b = x;
+    a.x = b;
+  })();
+  mutate(y);
+  return y;
+}