Fed 4.50%, Warsh Era: 2 hikes priced, TLT levels decoded

The S&P 500 closed down 1.2%, as bond yields rose.

The S&P 500 tumbled more than 1% in Wednesday's session, with losses steepening during Warsh' innagural press conference as chair.

Fed Chair Warsh: We recognize that inflation has been running "well ahead" of 2% Warsh Q&A: I see no reason to revisit 2% inflation goal until we have delivered FOMC June 2026 dot plot sees end of year target at 3.8% vs 3.4% in March 2026 Trump on the Fed raising rates: It could happen The full FOMC statement from the June 2026 meeting. Federal Reserve rate decision: No change to the Fed funds target, as expected US May advance retail sales +0.9% vs +0.5% expected US weekly EIA crude oil inventories -8263K vs -4566K expected US pending home sales for May 3.8% versus 0.8% expected US April business inventories +0.5% vs +0.5% expected ECB's Sleijpen: A repeat of 2022 inflation appears less likely but can't be excluded Canada new housing price index for May -0.3% versus -0.4% last month Markets: Gold down $90 to $4240 US 10-year yields up 7 bps to 4.49% US 2-year yields up 17 bps to 4.22% USD leads, NZD and GBP lag S&P 500 down 1.4% This was not the Kevin Warsh that Trump nominated with marching orders to lower rates. Instead, he sounded like a guy utterly determined to get inflation down to 2%, even if it causes pain. The market was surprised and it started with the statement, which was curt and finished on a line about price stability. Initially, that could be dismissed as housekeeping but as the press conference went on, it became abundantly clear this was the 2010 hawkish version of Warsh, no the guy who campaigned for the job sounding like he was Stephen Miran. The market response was to buy the US dollar in a big way. It came in waves and ultimately sent the euro down more than 100 pips to 1.1495. The pound was hit even harder with a dive to 1.3280 from 1.3400. No currency was spared with moves in the neighborhood of 1% but JPY did show some respect for intervention with a much smaller 20 pip move to 160.66. I fear more could be coming as US 2-year yields rose 17 bps to 4.21%. Market pricing now sits on 40 bps of hikes this year from 21 bps before the FOMC a

The yen slumped to its weakest level against the US dollar since July 2024, raising the risk of official intervention to prop it up.

Market Reaction: Start of Press Conference vs. End of Press Conference The overall takeaway is that the market interpreted Warsh and the Fed as more hawkish than expected, with the strongest reaction seen in the U.S. dollar and front-end Treasury yields. Stocks weakened modestly, while precious metals came under additional pressure. 📉 Stocks Takeaway The Russell 2000 gave back most of its gains. Overall equity reaction was negative but not disorderly. 💵 Foreign Exchange Takeaway The FX market delivered the clearest verdict: ✅ Broad-based U.S. dollar buying The largest dollar gains came against: EUR CHF The market appears to have pushed back expectations for future Fed easing. 📈 Treasury Yields Takeaway The 2-year yield rose over 4 basis points, the strongest move on the board. That is classic pricing for: "The Fed may stay restrictive longer." 🏆 Commodities & Crypto Takeaway Bitcoin softened as well. Bottom Line Biggest Winners U.S. Dollar Short-term Treasury yields Fed credibility on maintaining a restrictive stance Biggest Losers Gold Silver Dollar-sensitive currencies (EUR, GBP, AUD, NZD) Market Interpretation Warsh's comments reinforced the message from the dot plot that policymakers are not eager to cut rates anytime soon. The market responded by: Selling precious metals Leaning modestly against equities The strongest signal came from the combination of a stronger dollar and higher 2-year yields, which is typically the clearest indication that traders came away viewing the Fed as more hawkish than they did at the start of the press conference. This article was written by Greg Michalowski at investinglive.com.

CNBC screened the S&P 500 for stocks trading close to 52-week highs that have not made new highs recently.

Market levels at the time of the Press Conference shows: U.S. Stocks Dow Jones: 51,919.18 (-86.01, -0.17%) S&P 500: 7,470.93 (-40.41, -0.54%) NASDAQ: 26,228.62 (-147.72, -0.56%) Russell 2000: 2,945.98 (+6.78, +0.23%) Takeaway: Major indices remain under modest pressure U.S. Treasury Market 2Y Yield: 4.1379% (+9.1 bps) 5Y Yield: 4.2146% (+6.4 bps) 10Y Yield: 4.4552% (+2.7 bps) 30Y Yield: 4.9264% (-0.3 bps) Takeaway: The front end is selling off sharply, pushing short-term yields higher. The move suggests traders are scaling back expectations for lower rates, and raising of expectations Foreign Exchange EURUSD: 1.1547 (-0.52%) GBPUSD: 1.3350 (-0.57%) AUDUSD: 0.7041 (-0.35%) NZDUSD: 0.5790 (-0.69%) USDCHF: 0.7962 (+0.42%) USDCAD: 1.4058 (+0.46%) USDJPY: 160.46 (+0.01%) Takeaway: The dollar is broadly stronger, gaining against most major currencies as higher U.S. yields support the greenback. Commodities & Crypto WTI Crude Oil: $75.75 Gold: $4,288.35 (-0.90%) Silver: $69.04 (-1.30%) Bitcoin: $65,407 (-0.31%) Overall Market Theme Stocks: Lower Short-term Treasury yields: Higher U.S. Dollar: Stronger Gold/Silver: Weaker Oil: Lower This article was written by Greg Michalowski at investinglive.com.