This article first appeared on GuruFocus.
Federal Reserve Chair Kevin Warsh is reportedly prepared to raise interest rates in September if incoming inflation data runs hot, putting investors on notice that the central bank’s next move could be another increase rather than the cuts previously demanded by President Donald Trump. The prospect threatens rate-sensitive stocks, bonds and housing while making August inflation releases critical market catalysts.
Warsh would support higher rates at the Federal Open Market Committee’s September meeting if forthcoming price reports show inflation remaining stubbornly elevated, the Financial Times reported, citing people familiar with his thinking. The Fed held its benchmark rate at 3.5% to 3.75% in July, although three policymakers dissented in favor of an immediate increase.
Markets reacted quickly. The probability of a quarter-point hike at the Fed’s September 15-16 meeting climbed to 56.7%, according to CME FedWatch, from 54.4% a day earlier. The two-year Treasury yield rose four basis points to 4.22%, while the 10-year yield increased two basis points to 4.64%.
https://ca.finance.yahoo.com/news/kevin-warsh-opens-door-surprise-173401450.html