🔴The probability of the Fed raising interest rates in July suddenly jumped from 10.4% to 38.5% just a few days after Warsh's first FOMC meeting.

🔴The probability of holding rates steady at 350-375bps remains unchanged.
- One month ago: 87.2%
- One week ago: 89.3%
- One day ago: 61.5%
Currently back down to 61.5%
🔴The probability of increasing rates to 375-400bps:
- One month ago: 10.4%
- One week ago: 8.3%
Now surged to 38.5%
🔴The market is starting to price in the dot plot data:
- 9 out of 18 FOMC members forecast at least one rate hike before the end of 2026, with 6 out of 9 predicting two 25bps hikes
- Year-end PCE forecast raised to 3.6%, from 2.7% in March
- Median dot at the end of 2026 increased from 3.4% to 3.8% (previously the median was one cut in 2026)
-> Fed pricing has shifted from a “probable rate cut” stance to a “possible rate hike” stance.
Especially, Warsh did not publish individual dot forecasts, explaining "no personal forecasts," consistent with his long-standing view. But his statements lean hawkish: "inflation far from the 2% target" and calling it a "persistent burden."
🔴Yield on 2-year bonds – the most sensitive indicator to Fed expectations – spiked 14.4 basis points immediately after the meeting, with the market fully repricing the interest rate path.