In his debut as Fed Chair, Kevin Warsh presided over a hawkish FOMC meeting. The committee held rates steady but the dot plot showed 9 of 18 members projecting a rate hike this year, a significant hawkish surprise. Warsh dropped forward guidance, shortened the statement, and did not submit his own dot. He announced five task forces to review communications, the balance sheet, data, productivity/AI, and the inflation framework. The core message: after five years of above-target inflation, the Fed is unanimously and unambiguously committed to delivering price stability. Markets reacted with a sharp flattening of the yield curve (2yr +13bp, 30yr -1bp) and a risk-off move in equities.

Chair Warsh delivered a hawkish surprise: shorter statement, no forward guidance, task forces to overhaul communications/balance sheet/inflation framework. Emphasized recommitment to 2% inflation target, acknowledged overshoot for 5 years. Markets reacted with yield curve flattening (2Y +13bp, 30Y -1bp), dollar strength, equity selloff. Nine FOMC members penciled in a hike. Warsh signaled willingness to hike if inflation persists, but also wants markets to react to data, not Fed guidance.

Torsten Slok of Apollo argues that if the Fed chair reduces forward guidance (removes dot-plot/SEP or speaks less), markets lose an anchor and the residual easing bias disappears — effectively a more hawkish posture. Additionally, emphasizing a smaller balance sheet (QT) acts like tightening. With core inflation ~3% and very strong high-frequency consumption and labor indicators (travel, retail, hotels) there are few signs of slowing, so policy should lean tighter despite lower energy prices. Thus communication changes plus balance-sheet focus point toward upward pressure on yields and a more constrained equity environment.

Robert Kaplan discusses the Fed's new leadership under Kevin Warsh, predicting a shift away from forward guidance (dot plot) toward patience and flexibility. He highlights a structural AI-driven CapEx boom causing sticky inflation, offset by potential disinflation from oil price declines and AI adoption. He sees the Fed as likely to hold rates steady to assess the impact of lower oil prices on inflation.

Goldman Sachs expects WTI to stay near $75 by year-end and moderate to $70 in 2027, assuming a rapid recovery of Middle Eastern exports (by end of July) and production (by October). Saudi Arabia and UAE have spare capacity and will stabilize markets. Upside risk remains due to uncertainty about the Strait staying open; downside risk from potential lingering demand losses.

Kaplan says new Fed chair Warsh dropped forward guidance, causing markets to pull forward rate-hike expectations. If inflation doesn't cool by September, the Fed will likely act, and moves tend to come in sequences. Long-end yields are increasingly driven by supply/demand and deficits, not just Fed policy. He urges caution on over-interpreting the dot plot given the Iran deal was signed after dots were submitted.

Jeffrey Rosenberg warns the market may be overplaying the initial yield curve flattening reaction. He argues the real hawkish signal may be about the balance sheet, not just rates. Reducing the balance sheet would remove term premium support, potentially steepening the curve. He sees the Fed's role as secondary to strong earnings and CapEx for risk assets.

PIMCO's Adam Bo says the RBA is 'alert but no longer alarmed' on inflation, sees the hiking cycle as done, and expects the next move to be a rate cut in H2 2027. He argues Australian bonds are among the most attractive in developed markets due to favorable fiscal dynamics, strong demand, and the potential for capital appreciation when rates eventually fall.

Andrew Siszewski sees the hawkish dot plot and press conference as a credibility-building exercise ('bark, not bite'). He believes the Fed may not follow through if oil prices stay low. He notes the bond market saw a significant flattening, with breakevens falling. He views the inflation problem as solely oil-driven and supply-shock-based. He expects changes to inflation data (e.g., OER) and sees housing as weak but data centers filling the construction void.

Zaman thinks peak hawkishness is already priced in for the dollar. She sees a weaker dollar into year-end as the Strait reopening lowers oil prices and benefits energy importers. She favors high yielders like the Aussie, expects one more BOJ hike in Q4, and says less Fed forward guidance means markets must focus squarely on data.

Luzzetti sees the FOMC outcome as towards the hawkish end of expectations, driven by half the dots showing rate hikes and a significant upward revision in core inflation forecasts to 3.3% this year and 2.5% next year. He believes the Fed is accommodative given easy financial conditions and solid growth. He expects Warsh to use the press conference to frame the hawkish dot plot, and if he doesn't, other committee members will speak.

Torsten Slok argues the US economy is 'running pretty hot' with strong employment and inflation above 2%. He sees broadening inflation pressures from energy, tariffs, and AI-driven capex (data centers, chips, labor). The Fed will hold rates but needs flexibility. He warns software is hit by a 'double whammy' of AI disruption risk and high debt/low coverage ratios, making it vulnerable in a higher-for-longer rate environment.

Jeffrey Rosenberg warns against overplaying the initial yield curve flattening reaction. He argues the real hawkish signal may be about the balance sheet, not just rates. Reducing the balance sheet would remove the term premium compression that has benefited bonds, potentially leading to a different market reaction than the initial flattening suggests.

Kate Moore notes Warsh's collegial tone and consistency with Powell, but sees a clear hawkish tilt. She remains underweight duration, prefers equities over credit, and warns that smaller companies reliant on borrowing will suffer if rates stay high. She wants to see follow-through action, not just jawboning.

Warsh delivered a surprisingly hawkish dot plot with 8-9 members projecting a hike as next move, but the FOMC statement was dovish focusing on supply-side inflation. Markets saw front-end yields spike 16bps while breakevens fell, indicating the hawkishness is viewed as credible inflation-fighting. Key tailwind: oil down $35 from recent highs reduces pressure to actually hike. Fed likely to become less communicative, increasing market reliance on data and speeches.

Mike Wilson argues the bull market is intact and earnings-driven. He expects a rotation from semiconductors into pro-cyclical areas like regional banks and consumer goods, inspired by lower oil prices. He notes liquidity is decelerating, which could lead to a summer correction, but doesn't see it killing the bull market.

Mark Cabana discusses the uncertainty around new Fed Chair Kevin Warsh, who is a relative stranger to the bond market. He expects potential volatility but no immediate rate change. The committee leans hawkish, likely penciling in hikes. A resilient consumer and stable labor market suggest rates may not be restrictive, though lower oil prices ease inflation concerns. Mortgage rates seen rangebound at 6.25-6.75%.

Ian Lyngen argues markets are underpricing the risk that Kevin Warsh's Fed will reduce communication and shrink the balance sheet, which would raise volatility and push yields higher. A decline in oil from the US-Iran MOU could be disinflationary, giving the Fed room to wait. The interplay between balance-sheet runoff (upward pressure on rates) and energy-driven disinflation (downward pressure) creates asymmetric outcomes markets are not fully positioned for.

New Fed Chair Kevin Warsh signals a hawkish hold: the next rate move is likely higher, contrary to his campaign rhetoric. He blames the Iran conflict for persistent inflation (2.7%+), and the committee has raised its inflation outlook. Warsh's tone has shifted from 'regime change' to praising Fed dialogue, but the policy stance is clearly tilted toward tightening.

Betsy Duke expects a complete rewrite of the FOMC statement, not just a tweak. She believes Warsh will focus on communication, possibly eliminating the dot plot. She maintains Warsh is still a hawk who wants to be a great Fed chair, focused on controlling inflation. She notes Michelle Smith staying on as chief of staff is important for continuity.

Bloomberg reports Brent oil fell below $80 on U.S.-Iran deal reopening Strait of Hormuz, easing inflation pressures. U.S. housing starts hit six-year low due to apartment decline. New Fed Chair Kevin Warsh wants to reduce Fed communication, hinting at less forward guidance. Markets up, Dow +0.5%.

David Rosenberg argues that the recent rise in bond yields is driven by real rates, not inflation expectations, which remain anchored. He believes the energy shock has not seeped into wages, and that core inflation is already below target when adjusted for energy-adjacent items. He sees the US consumer in a recession on the income side (real disposable income negative 1% YoY), propped up only by a falling savings rate and credit. He expects the Fed's next move to be a cut, not a hike, and that bond yields have peaked. He criticizes the ECB's rate hike as a policy mistake and views the Canadian economy as flat with a household debt crisis.

New Fed Chair Kevin Warsh holds rates steady at 3.5-3.75%, shortens the policy statement, removes forward guidance, and refrains from submitting his own SEP projections. He emphasizes the FOMC's unanimous commitment to restoring price stability after 5+ years of above-target inflation, while acknowledging solid economic growth and elevated uncertainty from the Middle East conflict. The median SEP projects GDP at 2.2% this year, PCE inflation at 3.6% this year falling to 2.3% next year, and the fed funds rate ending 2025 at 3.8%.

Greg Peters and Ira Jersey discuss the Fed's challenge with sticky inflation and a firming labor market, arguing there is no case for rate cuts. They analyze the new Fed chair's need for credibility, the crowding out effect from massive AI and sovereign debt issuance, and the relative value of sovereign vs. corporate bonds.

Iran-US deal reduces worst-case oil disruption risk, enabling risk-on sentiment and potential rotation beyond AI/tech into cyclicals like financials and industrials. Tech enthusiasm high but valuations stretched; investors rotating from AI model companies to semiconductors. Korea and Taiwan fundamentals still robust with single-digit P/E ratios.

BOJ will hike to 1% (98% priced in). Underlying inflation still at 2.8%. Focus is on Deputy Governor Uchida's communications about path forward. Hard to deliver hawkish surprise as markets already pricing in further hikes. JGB balance sheet will continue shrinking regardless of taper pause due to redemptions. Yen weakness driven by risk appetite and carry trade, not just BOJ policy.

Rick Rieder (BlackRock) sees the Iran/Strait of Hormuz reopening as a major de-risking event that lowers headline inflation and reduces the need for central bank hikes. He highlights massive cash on sidelines ($9T in money markets) being unlocked by the SpaceX IPO and positive news, driving explosive equity moves. He expects the Fed under Kevin Warsh to use balance sheet tools rather than rate hikes to manage long rates and housing, and sees a K-shaped economy where the top 10% drives consumption while 75% struggles.

Torsten Slok (Apollo) argues the US economy remains very strong across consumer metrics (air travel, hotels, restaurants, Statue of Liberty visits). Falling oil prices are a welcome tailwind but may boost demand and keep core inflation sticky near 3%. AI spending boom and tax cuts (One Beautiful Bill) add further growth tailwinds. Front-end rates have fallen as markets price out hikes, but long rates are sticky. Fed's Warsh likely to be cautious and data-dependent. Overall, inflation is becoming more 'transitory' on energy, but core inflation remains a challenge.

Emily Ashworth from Standard Chartered Bank analyzes the oil market after the US-Iran deal. She says the market has unwound some risk premium but not priced in a full return to the status quo. She expects a residual risk premium for Gulf barrels. She provides a detailed timeline for supply recovery: 30-40% in weeks, up to 80% within a year, with 10-20% requiring multi-year remediation. Key uncertainties are OPEC+ reaction and demand recovery, including US strategic reserve refilling.

Ben Snider (Goldman Sachs) says the Iran ceasefire reduces the risk of a second-half deceleration from high energy prices. He notes the market rally is broad due to positioning unwinding (both hedge fund longs and shorts up ~4%), not just economics. AI earnings remain the strongest growth story for 2027, but the Fed is likely on hold for the near future. Equity issuance is a record in dollar terms but normal relative to market cap (~1%).