· Event impact
Fed Chair Warsh Signals Hawkish Shift; Markets Reprice for 2026 Hikes
Transmission path
Higher terminal rate expectations via hawkish dot plot revision and inflation forecast upgrades.
Market mechanism
Higher terminal rate expectations via hawkish dot plot revision and inflation forecast upgrades.
Extended read
The Federal Reserve, under new leadership, has pivoted toward a more aggressive posture despite maintaining current rates. The shift is driven by 'second-round effects' from supply shocks and a massive AI capex cycle that Citadel Securities warns will necessitate a September hike. Market participants are now adjusting to a median rate expectation of 3.8% by year-end 2026, a significant departure from previous easing hopes.
Exposed assets
DXY · SPY
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