task forces<\/a> to review different topics including the central bank\u2019s approach to inflation. While Warsh has been outspoken about his insistence on taming inflation, markets are growing impatient.\n <\/p>\n\n The heightened volatility in the bond market also comes as Warsh has signaled interest in less messaging and forward guidance from the central bank. Warsh said on Wednesday that he\u2019d prefer for markets to \u201cplay the ball\u201d as opposed to \u201cthe referee.\u201d\n <\/p>\n
\n \u201cI was comforted that markets in the inter-meeting period weren\u2019t reacting to us. They weren\u2019t reacting to (the Fed\u2019s quarterly dot plot) or to speeches,\u201d he said. \u201cThey appeared more than ever to be reacting to real-time events, so they\u2019re gauging themselves how restrictive the Treasury curve should be, and that I think has been a useful development.\u201d\n <\/p>\n
\n Stocks, bonds and the US dollar all fell as Warsh\u2019s remarks stirred up volatility. The Dow fell more than 1,100 points, or 2.19%, for its worst day in over a year. The dollar index fell more than 0.5% as traders adjusted bets on when the Fed might hike interest rates.\n <\/p>\n
\n Markets are pricing in a 57% chance the Fed raises interest rates in September, according to CME FedWatch, a real-time forecasting tool. This is down from almost 70% earlier this afternoon, though roughly in line with yesterday\u2019s odds.\n <\/p>\n
![\"Traders](\"https:\/\/www.newsbeep.com\/nz\/wp-content\/uploads\/2026\/07\/gettyimages-2287540848.jpg\")
<\/p>\n
\n Bond yields have climbed this month as tensions between Washington and Tehran have picked up and oil prices have rebounded higher. Warsh on Wednesday acknowledged the rise in yields but said he welcomed the market adjusting to data on its own. Still, higher yields \u2013 and the bond market \u2013 will test Warsh\u2019s outlook.\n <\/p>\n
\n The 10-year US Treasury yield influences borrowing costs across the economy, including mortgage rates. Higher yields mean tighter financial conditions. The 30-year fixed mortgage rate last week rose to 6.58%, its highest level in almost a year.\n <\/p>\n
\n Three Fed members dissented on Wednesday in favor of a rate hike, showing some divide within the central bank. The surge in yields is also one sign that the markets are testing the new Fed chair.\n <\/p>\n
\n \u201cIt\u2019s not uncommon for markets to test new Fed chairs,\u201d Sosnick said. \u201cYou don\u2019t really know how the market\u2019s going to react.\u201d\n <\/p>\n
\n \u201cThe market mood in the last few weeks has changed from sanguine about everything to a bit more cautious and a bit more nervous and a bit more \u2018show me\u2019 (action on inflation), and we\u2019re not getting that right now,\u201d he said.\n <\/p>\n
\n Stocks were also under pressure from weakness in tech and AI stocks. The Nasdaq Composite is down 9.8% from its peak in early June, putting the index on the brink of a correction (a fall of 10% from a recent peak).\n <\/p>\n
\n \u201cIn Warsh\u2019s press conference, he once again failed to specify how he intended to achieve his stridently asserted inflation resolve,\u201d Michael Feroli, chief US economist at JPMorgan Chase, said in a note.\n <\/p>\n
\n Feroli said he now expects the Fed to hike interest rates in December, compared to his previous forecast of the second half of 2027.\n <\/p>\n
\n \u201cWe wouldn\u2019t characterize this revision as the market \u2018pressuring\u2019 the Fed, but rather another challenge prompting the Fed to act to maintain its credibility,\u201d Feroli said.\n <\/p>\n
\n Christian Hoffmann, head of fixed income at Thornburg Investment Management, said he thinks the rise in long-term yields reflect a market that is \u201copenly questioning\u201d Warsh\u2019s credibility.\n <\/p>\n
\n \u201cCredibility is much easier to lose than it is to gain,\u201d Hoffmann said in a note. \u201cIt is difficult to view today\u2019s outcome as anything other than an own goal.\u201d\n <\/p>\n","protected":false},"excerpt":{"rendered":"New York\u00a0\u2014\u00a0 Federal Reserve Chairman Kevin Warsh repeatedly said Wednesday that the central bank is committed to reining…\n","protected":false},"author":2,"featured_media":552805,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[138,219,111,139,69],"class_list":["post-552804","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy","tag-new-zealand","tag-newzealand","tag-nz"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/552804","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=552804"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/552804\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/552805"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=552804"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=552804"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=552804"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}