Kevin Warsh's bond market bind
TL;DR
Kevin Warsh hasn't even been sworn in as Federal Reserve chair, and his first major test has already arrived. Global bond markets are pushing borrowing costs markedly higher amid energy supply disruptions, AI-fueled demand for capital, and massive fiscal deficits. The yield on 30-year US Treasuries has surged to 5.11%, its highest since 2007 — up from 4.63% in February. That sets up an environment where the Fed may need to prevent inflation expectations from coming unmoored, even as growth signals weaken.
Nauti's Take
Interesting setup for Nauti: Warsh inherits the Fed just as AI-driven capital demand is structurally lifting rates — a real chance to define a new playbook that separates the tech boom from inflation risk. The hurdle: cut too early and bond markets lose faith, hold the line and AI buildouts pay in slower growth.
Anyone financing infrastructure capex should read the next Fed meetings very closely.
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