Kevin Warsh, during his second press conference as Federal Reserve chairman, chose not to raise rates, letting the bond market do the tightening for him. Within the hour, the 30-year Treasury yield surged 10 basis points to 5.21%, its highest level in 19 years, while the Dow Jones plummeted 1,153 points, about 2.1%, its worst day since April 2025. Inflation has run above the Fed’s 2% target for 63 months according to Warsh himself, who warned he would not be constrained by market pricing for September hikes. Productivity grew at just a 0.3% annualized rate in the first quarter, a level many economists consider weak, challenging Warsh’s argument that AI-driven productivity gains could defeat inflation without a recession.
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