Warsh’s Path to Lower Rates Is Riddled With Hurdles
A number of factors are aligning to keep yields on government bonds higher.
This article is for subscribers only.
US President Donald Trump’s Federal Reserve Chair nominee Kevin Warsh will have a hard time ushering in a period of lower interest rates any time soon. That’s as a number of factors are aligning to keep yields on government bonds higher.
Before the war on Iran, investors were so confident the Fed was going to cut interest rates this year that the interest-sensitive two-year Treasury yielded less than 3.40%, a quarter-percentage point lower than the overnight rate. These expectations were dominant enough that the 10-year benchmark Treasury yield was seen stabilizing below 4%, helping reduce mortgage rates below 6% for the first time since 2022.