Wall Street is panicking over Kevin Warsh’s patience

Kevin Warsh, in his second press conference as Fed chairman, gave the bond market credit for doing his tightening for him. Within the hour, it went further, and made clear what it thought of his decision not to raise rates.

The 30-year Treasury yield surged 10 basis points to 5.21%, its highest level in 19 years, while the 10-year—important for the mortgage market—climbed seven basis points, to 4.67%. However, the two-year actually fell four basis points.

The reason? Traders were gauging the odds of an imminent hike, and simultaneously demanded more compensation to hold longer government debt, believing that inflation would continue to bite. 

Equities also took the press conference badly. After a brief surge following the initial announcement, the Dow Jones industrial average fell 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%.

Warsh had previously spent the hour telling reporters that his system of non–forward guidance was working, partially because markets could do the job for him. 

“We’ve seen a material tightening, not just in nominal rates, but in real rates too, and........

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