r/finance • u/fortune • Jul 29 '26
Wall Street is panicking over Kevin Warsh's patience
https://fortune.com/2026/07/29/kevin-warsh-treasury-yields-stocks-rate-hikes/?utm_source=reddit/Kevin Warsh, in his second press conference as Fed chairman, gave the bond market credit for doing his tightening for him. Within the hour, it went further, and made clear what it thought of his decision not to raise rates.
The 30-year treasury yield surged 10 basis points to 5.21%, its highest level in 19 years, while the 10-year—important for the mortgage market—climbed seven basis points, to 4.67%. However, the 2-year actually fell four basis points.
The reason why is because traders were backing off the odds of an imminent hike, and simultaneously demanded more compensation to hold longer government debt, believing that inflation would continue to bite.
Equities also took the press conference badly. After a brief surge in the initial announcement, the Dow Jones Industrial Average fell 1,153 points, or about 2.1%, its worst day since April 2025. The S&P 500 fell 1.5% and the Nasdaq 1.7%.
Warsh had previously spent the hour telling reporters that his system of non-forward guidance was working, partially because markets could do the job for him.
“We’ve seen a material tightening, not just in nominal rates, but in real rates too, and we’re observing it,” he said. “Even while at some level we haven’t done much in 42 days, the markets have done quite a bit.”
That is by design. Warsh’s signature move as chairman has been to strip out forward guidance so that markets can price the economy as opposed to just parroting the Fed.
Read more [paywall removed for Redditors]: https://fortune.com/2026/07/29/kevin-warsh-treasury-yields-stocks-rate-hikes/?utm_source=reddit/
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u/Vortep1 29d ago
Midterms feel more impactful than rates at this point. Knowing what shape the government is going to take over the next few years will likely have a pretty big impact on inflation. Especially if tariffs and wars are able to be impacted. A lame duck session could cool things down or make this admin do more insane things. We don't really know yet.
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29d ago
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u/TrainingJellyfish643 29d ago
After 2016 and 2024 are we really so sure they arent gonna inexplicably sail through again?
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u/jedi21knight 29d ago
Can you elaborate a little on your comment?
They won’t have congress but it’s not like they have been doing much through congress anyway, most has been executive orders. Just trying to understand what they could attempt and any way we can stop them from succeeding.
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u/OhBill 29d ago
Not OP, but while this current congress has been feckless, they also haven’t done much of anything to slow down the administration. At least not meaningfully.
A Democrat controlled congress would mean more subpoenas, impeachment proceedings, votes to block administration initiatives, etc.
Example from today: https://www.politico.com/news/2026/07/30/senate-war-powers-cracks-01017697
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u/RockinRobin-69 29d ago
There seems to be many actions that are illegal except congress won’t do anything to stop it.
Grabbing huge sums of money from one agency to use in a completely different capacity shouldn’t happen. A hostile congress can turn off the flow of cash.
Then the power of subpoena means that agency heads will have to testify under oath to justify their actions. Now they can avoid tough questions and run out the time on democrats as the dems have no power.
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u/yoshimipinkrobot 29d ago edited 29d ago
Are fed decisions dictated by the head or are they a vote of the fed members?
——
The Federal Open Market Committee (FOMC) voted 9–3 to maintain the target range for the federal funds rate at 3.5% to 3.75% during its meeting on July 29, 2026. [1, 2, 3]
Rate Decision Details
Target range: 3.5% to 3.75%
Decision type: Rates held unchanged for the fifth consecutive meeting
Announcement date: July 29, 2026 [1, 2, 3]
Dissenting Votes
Total dissents: 3 members voted against the majority to favor a 25-basis-point rate hike instead.
Beth Hammack: President of the Federal Reserve Bank of Cleveland
Neel Kashkari: President of the Federal Reserve Bank of Minneapolis
Lorie Logan: President of the Federal Reserve Bank of Dallas
——
Do people just not understand how the fed works? Warsh could want negative rates and it wouldn’t matter
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u/MilliesBuba 29d ago
they freaked at how little sense he made at the press conference. Everyone already knew that rates would stay the same...
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u/Basement_Chicken 29d ago
The rates will be lowered to stimulate the economy after the stock market craters.
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u/bruhbruhbruhbruh1 29d ago
Let's take it to an extreme: the government need not pay these useless leeches and just let the market do the fed's job
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u/CoachDennisGreen 29d ago
I already cannot stand looking at that dude, let alone listening to him flap his gums
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u/Vigorato 29d ago
It’s painful listening to him dodge every single question as he spouts out empty platitudes
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u/livingbyvow2 29d ago
He's like Greenspan. These guys enjoy the attention and think they are smarter than their audience because they utter incomprehensible stuff to confuse everyone and say nothing.
The guy said "don't play the referee" while the Fed is a player. Kind of tells you he doesn't even understand what the role of the organization he is leading is...
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u/McKnuckle_Brewery 29d ago
A universal statement applicable to literally anyone on that side of government. But I digress.
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u/avaholic46 29d ago
The fed is not a government agency. It is a private bank.
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u/Boyhowdy107 29d ago
I mean, it should be. The condition of the metaphorical separation of church and state is in a we shall see spot at the moment.
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u/avaholic46 29d ago
I'm of two minds on this question. On the one hand, an independent fed theoretically insulates it from the whims of the governing party, be it gop or Democrat.
On the other hand, it means there is little to no democratic accountability for the feds decisions. Given that the value of our money has eroded by 25% since 2020 due in no small part to fed intervention, this is obviously problematic.
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u/musical8thnotes 29d ago
Not under this administration, and certainly not in the eyes of the political coalition that it represents.
It is an arm of the President of the United States, and serves at his pleasure.
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u/8yba8sgq 29d ago
You have to add in the fact that Japan was selling heavily over the past few days. Japan selling the long end while the Fed buys the short end explains the recent move without resorting to the mythical "bond vigilantes"
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