New chair, same headache
Kevin Warsh is stepping into his first FOMC meeting as Fed chair with the kind of backdrop that makes policy folks reach for the antacids. Employment is still running hot, inflation is drifting higher, and that combo makes a fast pivot to easier money look a lot less likely.
Markets already got the memo
Traders have practically slapped a giant nope sticker on a near-term cut: the market is pricing a 99.4% probability of no rate cut. And if you’re wondering whether the next move could be a cut later, the 2-year Treasury is whispering a different story — one that leaves room for hikes, not handouts.
Why investors should care
That matters because rates are the plumbing under the whole market house. When cuts get pushed out, you can feel it everywhere:
- growth stocks lose a little of that extra turbocharge
- bond yields can stay sticky or climb
- housing and other rate-sensitive corners may keep limping along
President Trump may be pushing for lower rates, but the data is doing the talking. And right now, the data is basically saying: not so fast.
Big picture: if Warsh wants to tighten without actually raising rates, he’ll need the economy to cool in a way that looks orderly, not messy — which is a lot easier to say than to pull off.