Overview
- Warsh, confirmed by the Senate and now chair of the Federal Reserve, is prioritizing a sharp cut in the central bank’s holdings toward about $3 trillion from roughly $6.7 trillion.
- Markets shifted after his nomination and early comments, with Treasury yields jumping as the 30‑year moved above 5.1% and the two‑year rose past 4.0%.
- Futures tied to the Fed’s policy rate show investors pulling back expectations for quick cuts, with some pricing a possible increase early next year.
- Selling Treasuries and mortgage‑backed securities pushes bond prices down and yields up, which makes mortgages, corporate loans, and government borrowing more expensive.
- Analysts warn of a more divided rate‑setting committee under pressure from President Trump and note that higher U.S. yields could strain emerging markets such as Argentina by raising their funding costs.