Warsh's Clarity Hinges on Rate Hike Decision

Investors are increasingly worried about government deficits and persistent inflation, driving up the price of money. The Federal Reserve can ease some of those nerves.

The conflict in the Middle East has intensified, pushing up energy prices again and forcing heavily indebted countries to borrow more to increase defense spending and fund the war. This deepened a global rout in the bond market, sending yields to multi-year and multi-decade highs. Higher yields raise borrowing costs for consumers for everything from mortgages and credit cards to the US government's $40 trillion debt.

However, Fed Chairman Kevin Warsh has hinted that rate hikes may be coming soon, which could provide more clarity and stability for the bond market. In a recent speech, Warsh said there was more 'work to do' in fighting inflation, which investors welcomed as a signal of potential future actions.