Warsh's Patience Sparks Market Panic

Kevin Warsh's approach to monetary policy is causing concern among investors. In his second press conference as Fed chairman, he suggested that the bond market was doing his tightening for him, but within an hour, yields surged to their highest levels in years.

The 30-year Treasury yield reached 5.21%, its highest level since 2004, while the 10-year yield climbed seven basis points to 4.67%. However, the 2-year yield fell four basis points. This reaction suggests that traders are backing off the odds of an imminent rate hike and demanding more compensation for holding longer-term government debt.

Equities also took a hit, with the Dow Jones Industrial Average falling 1,153 points, or about 2.1%, its worst day since April 2025. The S&P 500 fell 1.5% and the Nasdaq 1.7%.