Bond Market Slams Warsh with 'Credibility Warning' over Inflation Bluff

The market's reaction to Kevin Warsh's second meeting as Federal Reserve chairman has been swift and decisive. After yields on 30-year US Treasury bonds spiked by as much as 14 basis points to 5.23 percent, Bloomberg declared a 'credibility warning'.

According to the consensus among analysts, Warsh's tough talk on inflation was seen as empty, with investors punishing him for it. The market seemed to be calling his bluff, and CNN reported that the bond market had 'called his bluff'.

The yields on 30-year US Treasury bonds were at their loftiest level since 2007 when the spike occurred. This sudden increase was seen as a vote of no confidence in Warsh's ability to tackle inflation effectively.