Markets see 'all hat, no cattle' in Fed's inflation credibility

MacroDigital Finance Impact 4

โดย Yahoo Finance·Read original

Summary · why it matters

Markets are signaling that Federal Reserve Chairman Kevin Warsh's tough talk on inflation lacks follow-through, with long-dated bond yields surging after last week's policy decision. The 30-year Treasury yield hit its highest since 2007, while the 10-year yield has climbed roughly 48 basis points this year to 4.64%. Bank of America economists, using the Texas expression 'all hat, no cattle,' argued that Warsh's dovish tone and sidestepping of questions undermined his pledge to deliver 2% inflation. They expect the Fed to hike by 25 basis points in September and twice more in 2026 to regain credibility, warning that talking tough without action risks losing market confidence.

Effective Federal Funds Rate ▲United States Government Bond 10Y ▲United States 30 Year Bond Yield ▲

Impact on stocks 5

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％Effective Federal Funds Rate

▲ PositiveMonetaryrelevance

Fed expected to hike rates to regain credibility, raising the policy rate.

％United States Government Bond 10Y

▲ PositiveMonetaryrelevance

10-year yield has climbed 48 bps this year to 4.64% on Fed credibility concerns.

％United States 30 Year Bond Yield

▲ PositiveMonetaryrelevance

30-year yield hit highest since 2007 after Fed's dovish tone.