Skip to Content News Archives Economy Energy Oil & Gas Renewables Electric Vehicles Mining Commodities Agriculture Real Estate Mortgages Mortgage Rates Finance Banking Insurance Fintech Cryptocurrency Work Wealth Smart Money Wealth Management Investor Personal Finance Family Finance Retirement Taxes High Net Worth FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials More Innovation Information Technology FP500 Podcasts Small Business Lives Told Tails Told Shopping Financial Post Store Obituaries Place a Notice Advertising Advertising With Us Advertising Solutions Postmedia Ad Manager Sponsorship Requests Classifieds Place a Classifieds ad Working Profile Settings My Subscriptions Saved Articles My Offers Newsletters Customer Service FAQ News Economy Energy Mining Real Estate Finance Work Wealth Investor FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials HomeInvestorNewsBond market ushers in Warsh era with bets on 2026 hikeTraders are pricing in that the Fed is virtually certain to start raising rates by DecemberAuthor of the article: You can save this article by registering for free here. Or sign-in if you have an account.Chairman of the Federal Reserve Kevin Warsh delivers remarks after being sworn in during a swearing-in ceremony in the East Room of the White House on May 22, 2026 in Washington, D.C. Photo by Roberto Schmidt/Getty ImagesAs Kevin Warsh takes the helm at the United States Federal Reserve, bond investors are betting he’ll prioritize the central bank’s inflation-fighting credibility over U.S. President Donald Trump’s push for lower interest rates.Subscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.Subscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountorWith the Iran war unleashing the biggest inflation surge since 2023, traders are pricing in that the Fed is virtually certain to start raising rates by December. That’s a sharp reversal from just three months ago, when markets were betting there were deeper cuts ahead.The shift reflects the impact of turmoil in the Middle East, the resilient U.S. economy and an AI-investment boom pushing the stock market higher, all of which have fuelled concerns that inflation could remain stuck above the Fed’s two per cent target for some time.Canada's best source for investing news, analysis and insight.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Investor will soon be in your inbox.We encountered an issue signing you up. Please try againIn a volatile trading week, two-year Treasury yields — the most sensitive to Fed policy expectations — climbed to as much as 4.14 per cent Friday, the highest in more than a year and nearly 40 basis points above the top end of the Fed’s benchmark rate range. Thirty-year yields briefly touched 5.2 per cent last week, a level last seen in 2007, before retreating to 5.06 per cent.Warsh assumes leadership as a growing number of Fed officials abandon their easing bias. Governor Christopher Waller — a Trump appointee who earlier this year advocated for rate cuts to protect the labour market — said Friday that the Fed’s next move is now just as likely to be a hike. A slew of policymakers, including Vice Chair Philip Jefferson and New York Fed President John Williams, are scheduled to speak this week.As Warsh was sworn into office Friday, Trump, who has repeatedly pressured the Fed to lower borrowing costs, said he wants Warsh to lead the central bank independently.Some investors, including Chitrang Purani, a portfolio manager at Capital Group, are turning more bullish on short-term Treasuries as yields rise and rate hikes are priced in.“I do believe that the bar to hiking rates is still reasonably high because this Fed and Warsh may want to be a little bit more patient before taking that next step to fully understand how inflation is translating into labor markets and financial conditions,” Purani said. “I personally don’t believe the Fed’s reaction function to economic data will be materially different under Warsh than it was in the past.”In addition to reading tea leaves of Fed speakers, bond traders will also focus this week on auctions of two-, five- and seven-year Treasury notes for signs of investor demand. Join the Conversation This website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.