Traders piled into betting on interest-rate hikes as soon as next month after Kevin Warsh used his debut press conference as Federal Reserve chairman to make clear the central bank won't tolerate high inflation. Two-year Treasury yields steadied on Thursday at around 4.17% after shooting up 13 basis points on Wednesday, the biggest jump since April 2025 and matching the largest increase on a Fed meeting day since 2008. Half of the individual Fed members' projections showed they expect to raise rates by the end of the year. Futures traders solidified expectations for a quarter-point rate hike by October, if not sooner, while 30-year Treasury yields slipped to the lowest since late April in a sign of faith that inflation will ultimately be contained. Warsh refused to deliver forward guidance, slashed the length of the Fed's statement, and declined to give a personal view on where rates are headed, with Evercore ISI's Krishna Guha saying Warsh regards market volatility as a price worth paying for the market to form an independent view of the appropriate rate path.
Bank of MontrealRate hikes increase borrowing costs, pressuring bank net interest margins and loan demand.
Goldman Sachs Group IncHigher rates can slow economic activity and reduce investment banking fees and trading revenue.