Federal Reserve Chairman Kevin Warsh sparked a Treasury selloff and sent yields sharply higher during his post-meeting press conference following the Fed’s decision to hold rates steady. Bank of America called this a central bank inflation credibility shock, with economists predicting the Fed may be forced to raise rates in September due to market doubts. A key test will come on Friday when the Labor Department releases monthly payroll data. The bond yield curve will serve as a key indicator of how much Wall Street trusts the Fed’s commitment to fighting inflation.
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