Fed's 'Silent Pressure' Strategy: Market Rates Rose 100 Points in 42 Days

Kevin Warsh, in his second term as Fed chair, emphasized that markets could handle the job. 'Markets have done quite a bit in 42 days,' he said. The 30-year Treasury yield surged to 5.21%, its highest in 19 years. The 10-year yield climbed to 4.67%, while the 2-year yield fell 4 basis points. Markets reduced odds of a hike, demanding higher yields for longer-term debt. Stocks dropped 2.1% after the press conference. The S&P 500 fell 1.5%, and the Nasdaq 1.7%. Warsh stated, 'The decision we made today was the farthest thing from inertia.' The FOMC report noted 'economy output is solid,' but productivity rates of 0.3% (Q1) and 1% (Q2) were deemed 'solid-to-weak' by economists. Warsh, who believes AI will solve the issue, acknowledged the Fed's 'inferring aggregate supply.' > Markets reacted with 'Fed has lost control,' signaling potential semiconductor crisis. Nvidia and other chip-related stocks may face pressure.