Bond Yields and Rate-Hike Fears Surge After Warsh's Hawkish FOMC
Key Questions
What is causing pressure on markets right now?
Markets are under pressure from elevated CPI readings, hot PPI data, and rising 10-year yields around 4.54%. Rate-hike odds for December 2026 have climbed to 42%, delaying expected Fed cuts into 2027.
How does the latest inflation data look?
The CPI headline reached its highest level since 2023, driven by energy prices, while core MoM inflation came in cooler. Oil's recent collapse has eased some near-term inflation concerns, though sticky core readings persist.
What key event is upcoming for the Fed?
Kevin Warsh's Fed debut on June 17 is viewed as an important catalyst. Global tightening from the ECB is also adding to the overall rate-hike environment.
Kevin Warsh's first FOMC decision on June 17 delivered a hawkish surprise, with rate hike odds for December 2026 jumping above 50%. 10Y yield spiked to ~4.65%, 2Y to 4.19%. Dollar tested 100.40. Inflation spreading beyond energy (child care) adds to stickiness. Market now pricing cuts delayed to 2027. ECB hiking adds global tightening. Oil collapse provides limited relief.