June 22, 2026
Kevin Warsh, the new Federal Reserve Chair, has a tough road ahead.
Before he took over, Warsh’s predecessor Jerome Powell oversaw his final meeting and there were four dissenting votes. The last and only time there were four dissenting votes was October 1992.
One rate cut vote was predicted. But three other regional presidents, while not wanting a rate hike at that meeting, wanted to avoid language indicating the Fed had an easing bias.
This is the Fed Kevin Warsh is inheriting.
He won the Fed chair nomination with a policy agenda of lower interest rates and a smaller Fed balance sheet. As he takes the reins, economic conditions will make it tough for him to achieve either of these goals.
See, there’s been a troubling rise in inflation over the past two months, and Fed policymakers aren’t warm to the rate cuts President Trump wants. Also, the job market seems to be stabilizing, further hurting the case for lower rates.
Warsh’s aim of a smaller Fed presence in financial markets also looks difficult. Other Fed officials acknowledged that it’s likely to be a detailed, slow process.
To sum it up, there’s not a lot of consensus at the Fed and economic conditions aren’t necessarily aligned with what some folks want – that is, lower rates and a smaller Fed. Inflation is ramping higher while the job market stabilizes.
Some pundits are hedging their bets and saying the Fed could raise rates before lowering them. Of course, that’s not what the president wants or what the government really needs at this point.
Perhaps that’s the bond market’s message because bond yields could sink this market run. Analysts seem to agree the 5.15% level for the 30-year U.S. Treasury is critical. Well, we breached that level last month when the yield rose to 5.181% on May 19 (the highest level since July 2007).
Bond selling could pick up, which would push yields higher. In fact, it’s already happening. Treasury data show China reduced its Treasury holdings for the eighth time in the past 12 months, and Japan reduced its holdings to the lowest level since September.
Good luck, Mr. Warsh.
Daniel A. White is an investment advisory representative of and provides advisory services through CoreCap Advisors, LLC. Daniel A. White & Associates and CoreCap Advisors are separate and unaffiliated entities.