Fed Chair Warsh Testifies: 50% Odds for July Rate Hike as Inflation Sticks
Bond traders are pricing a 50% chance of a July rate hike, a sharp jump from weeks ago. Fed Chair Warsh testifies today, but the real signal comes from sticky core inflation and a hawkish pivot. Crypto markets brace for tighter liquidity.
Fed Chair Kevin Warsh hits Congress today, and bond desks are already calling the shot: a July rate hike is now a 50/50 bet. That's a massive surge from under 10% just weeks ago, with 2-year Treasury yields locked above 4.25%. The market's already priced for pain.
The pivot came from Fed Governor Christopher Waller, previously a dove, now signaling a hike if core prices show another "hot reading". June CPI data, due this week, will likely show headline inflation cooling, but core inflation remains stubbornly above the Fed's 2% target. That stickiness is the real problem.
Don't expect Warsh to tip his hand. He's built a rep for avoiding forward guidance, preferring "a good family fight" behind closed doors. The real decision drops at the July 29 FOMC meeting, not this week's congressional theater.
A hike means higher borrowing costs across the board, from credit cards to mortgages. For risk assets like crypto, it's a liquidity drain.