Bond investors express skepticism over potential Fed rate hikes under Kevin Warsh

Kevin Warsh has been running the Federal Reserve for about 100 days, and the bond market has already made up its mind: it doesn’t believe him. Following the Fed’s late July 2026 policy meeting, where rates were held steady, 30-year Treasury yields surged 14 basis points to nearly 5.23%. Meanwhile, short-term bond yields actually fell, steepening the yield curve. The credibility gap Warsh took the helm in May 2026 with a reputation as a monetary hawk. He scrapped the Fed’s longstanding practice of forward guidance and installed what he calls a “data-driven approach,” meaning the Fed will react to economic conditions as they come rather than committing to a path months in advance. July 2026 PCE inflation clocked in at 3.7%, nearly double the Fed’s 2% target. Warsh acknowledged the Fed has “work to do” if inflation trends don’t improve, but acknowledgment and action are two very different things. At the Jackson Hole symposium on August 28, marking his 100th day in office, Warsh noted that financial conditions are not restrictive. CME FedWatch data showed the speech bumped September rate-hike odds to roughly 57%, implying a 25-basis-point increase at the mid-September meeting. A coin-f...