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2h ago

Bond Rout Tests Warsh’s Fed as Markets Price In a Possible Rate Hike

An Iran‑driven energy shock is lifting inflation enough to push the Fed toward a tougher stance.

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Kevin Warsh, U.S. President Donald Trump's nominee for Chair of the Federal Reserve, testifies during his Senate Committee on Banking, Housing, and Urban Affairs confirmation hearing in the Dirksen Senate Office Building on April 21, 2026 in Washington, DC.
photo of a 100 dollar bill with the federal reserve seal
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Overview

  • U.S. bond yields jumped to multi‑year highs Monday, with the 10‑year near 4.59% and the 30‑year around 5.11%, signaling a broad selloff in government debt.
  • Kevin Warsh has been confirmed as Fed chair and is expected to take over this week, with Jerome Powell serving as chair pro tempore until the swearing‑in.
  • Traders rapidly repriced policy odds after last week’s hot inflation data, and the CME FedWatch tool put the chance of a quarter‑point hike near 50% on May 15.
  • Forecasts now diverge, with BNP Paribas urging a long hold into 2026 while Ed Yardeni argues for a July hike to reassure bond investors who are pushing yields higher.
  • The Iran conflict has triggered an energy shock that helped lift April CPI to 3.8% and pushed Brent crude near $111, a mix that raises costs for mortgages, companies, and the government.