Finance

In his first meeting as Chair, Kevin Warsh oversaw a decision to keep interest rates steady at 3.5–3.75% while signaling a potential hike later this year. The central bank raised its 2026 core inflation projection to 3.3%, prompting traders to price in higher-for-longer borrowing costs and shifting the market's focus toward price stability.

The 2-year Treasury yield surged toward 4.19% as investors reacted to the Federal Reserve's updated dot plot, which showed half of the officials now favor at least one rate increase in 2026. This shift has led to a dramatic flattening of the yield curve and increased compensation demands for long-dated bonds amid persistent fiscal deficits.

Market optimism regarding a long-term fix to the U.S.-Iran conflict has turned defensive as recent discussions in Switzerland faced delays, renewing escalation fears. While Brent crude prices previously dipped on news of a tentative deal, persistent supply concerns and high energy costs continue to squeeze household spending and pressure credit-sensitive sectors.