- Fed Chair Warsh: We recognize that inflation has been running "well ahead" of 2%
- Warsh Q&A: I see no reason to revisit 2% inflation goal until we have delivered
- FOMC June 2026 dot plot sees end of year target at 3.8% vs 3.4% in March 2026
- Trump on the Fed raising rates: It could happen
- The full FOMC statement from the June 2026 meeting.
- Federal Reserve rate decision: No change to the Fed funds target, as expected
- US May advance retail sales +0.9% vs +0.5% expected
- US weekly EIA crude oil inventories -8263K vs -4566K expected
- US pending home sales for May 3.8% versus 0.8% expected
- US April business inventories +0.5% vs +0.5% expected
- ECB's Sleijpen: A repeat of 2022 inflation appears less likely but can't be excluded
- Canada new housing price index for May -0.3% versus -0.4% last month
Markets:
- Gold down $90 to $4240
- US 10-year yields up 7 bps to 4.49%
- US 2-year yields up 17 bps to 4.22%
- USD leads, NZD and GBP lag
- S&P 500 down 1.4%
This was not the Kevin Warsh that Trump nominated with marching orders to lower rates. Instead, he sounded like a guy utterly determined to get inflation down to 2%, even if it causes pain.
The market was surprised and it started with the statement, which was curt and finished on a line about price stability. Initially, that could be dismissed as housekeeping but as the press conference went on, it became abundantly clear this was the 2010 hawkish version of Warsh, no the guy who campaigned for the job sounding like he was Stephen Miran.
The market response was to buy the US dollar in a big way. It came in waves and ultimately sent the euro down more than 100 pips to 1.1495. The pound was hit even harder with a dive to 1.3280 from 1.3400. No currency was spared with moves in the neighborhood of 1% but JPY did show some respect for intervention with a much smaller 20 pip move to 160.66.
I fear more could be coming as US 2-year yields rose 17 bps to 4.21%. Market pricing now sits on 40 bps of hikes this year from 21 bps before the FOMC and even the July meeting now looks like it's in play. There was hardly even a nod to the employment side of the mandate.
Stock markets were slow to react to the moves in bonds but the selling picked up after the press conference and the market struggled from there with consumer discretionary lagging, including a 3.5% decline in Amazon and a 4.3% drop in Target shares.
