Finance

In his debut meeting as Fed Chair, Kevin Warsh oversaw a unanimous decision to maintain interest rates at 3.50% to 3.75%, but the committee's forward-looking guidance turned notably hawkish. Updated economic projections revealed that half of the officials now anticipate at least one rate hike before the end of 2026. This pivot reflects growing concerns over persistent inflation, which reached its highest reading since 2023 at 4.2%.

Energy markets experienced a sharp downturn as the United States and Iran reached a framework agreement to end their conflict and reopen the Strait of Hormuz. Crude oil prices dropped significantly, with some benchmarks falling as much as 13% during the week. This geopolitical development has eased immediate supply fears and helped temper broader market inflation concerns.

The bond market saw a notable shift this week as Treasury yields rose in response to the Federal Reserve's updated interest rate projections. The 2-year Treasury yield, which is highly sensitive to policy changes, climbed to 4.207%, its highest level since early 2025. Investors are currently pricing in more than a 70% chance of a rate hike by October 2026.