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Investors ramp up bets on steeper yield curve under Warsh-led Fed
Investors are ramping up bets on higher long‑dated Treasury yields and a steeper yield curve as incoming Federal Reserve Chair Kevin Warsh is expected to press for interest rate cuts while shrinking the U.S. central bank's balance sheet. Warsh's preference for a materially smaller Fed balance sheet, currently around $6.59 trillion, implies a withdrawal of meaningful government demand for Treasuries, a move which tightens financial conditions because the central bank is not providing liquidity to the market. Reduced Fed bond reinvestments and purchases expand the amount of Treasury supply in the market, which tends ... (full story)
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DwnUndrTrdr
Feb 3, 2026 8:12pm
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Kevin Warsh, President Donald Trump’s expected nominee for Federal Reserve Chair, may pursue faster and deeper interest rate cuts than markets expect. Economist Robin Brooks, a senior fellow at the Brookings Institution, predicts Warsh could cut rates by 100 basis points across four meetings from June to October. Markets are currently pricing in only 40 ...
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