Bloomberg Surveillance · Wednesday, July 29, 2026
The Federal Reserve kept interest rates unchanged, but Chair Kevin Warsh's subsequent news conference led to significant market volatility. Traders are questioning the Fed's commitment to fighting inflation as long-term Treasury yields surged, with the 30-year yield breaking through levels not seen since 2007.
“Nominal and real yields are materially higher across the treasury curve. In fact, some of the increases in market interest rates between FMC meetings are among the most significant in the last last two decades.”
“So it's the FED chair outsourcing monetment policy to the market. And if it is, is this market starting to wonder whether this FED will actually follow through the most important part of this move today in this market, crossessor is in the bond market.”
“Frankly, he came out said that he was really happy to have the input of the market, but he wasn't outsourcing the Fed's decision to the market. He talked about these four goals, these deep questions that we talk about every single day, but gave no conclusion as to direction. You talked about a divided committee as not divided but united in a determination to bring down inflation, and this market said, you know what, we're going to call bs on this, and you're not going to hike rates and you're going to try to job on us, and you think that we're going to do the job for you, and so they're calling the bluff.”