· Event impact
Fed Chair Warsh Signals Hawkish Pivot; Markets Reprice for 2026 Hike
Transmission path
Higher terminal rate expectations driving a selloff in long-duration equities and bonds.
Market mechanism
Higher terminal rate expectations driving a selloff in long-duration equities and bonds.
Extended read
In his first press conference, Chair Kevin Warsh shocked markets by pivoting away from the easing bias of his predecessor. While the rate hold was expected, the 'dot plot' and inflation commentary suggested a regime focused on aggressive price stability. The 2026 PCE forecast of 3.6% indicates the Fed views current inflation as stickier than previously modeled, necessitating a 'higher for longer' or even 'higher still' stance.
Exposed assets
SPY · DGS10
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