Warsh Faces Fomc as June Fed Holds Rates Steady

Fomc opens June 16 with Kevin Warsh presiding over his first Federal Reserve meeting, and rates are widely expected to stay unchanged. The two-day session ends Wednesday, June 17, leaving borrowers, traders and rate watchers focused on the signal Warsh sends after the decision.

52,000 was the level the Dow Jones Industrial Average finished above on the first day of the meeting, even as tech stocks slumped. That split leaves Wall Street balancing fresh equity highs against the chance that Warsh’s first public comments as chair could shift expectations for borrowing costs.

52,000 on the Dow

4.056% was the 2-year Treasury yield after ticking down from 4.064% on Monday, a small move that shows traders were already leaning toward no change in the federal funds rate. Front-month West Texas Intermediate crude oil futures also finished below $80 per barrel for the first time since March 4, while high energy prices kept inflation pressures in view.

More than a decade is how long Nick Timiraos said Warsh has argued that the Fed should say less, and Warsh also holds a post-meeting press conference. That combination puts his communication style under the same microscope as the rate decision itself, because how much he chooses to say can move mortgage rates, Treasury yields and market volatility.

Warsh's first press conference

Louis Navellier said, “Tomorrow, we get to hear Kevin Warsh's first comments as the new head of the Federal Reserve, when the FOMC releases its rate decision.” He added, “If he's perceived as more dovish than expected, it should be bullish for stocks. If he's hawkish, it could bring volatility.”

Wall Street will parse Wednesday's meeting, his first as Fed chairman, for any sign of where he'll take it. If Warsh uses the press conference to reveal less and say more carefully, traders will have a thinner roadmap for the next move in rates — and that is exactly what Treasury and mortgage markets must price first.