Wall Street no longer believes that Kevin Warsh can do what Trump wants | Fortune

"S&P 500 futures were up 0.21% this morning. The index was up 0.58% yesterday-another record high at 7,444.25. In Europe, the Stoxx 600 was up 0.21% in early trading and the U.K.'s FTSE 100 was up 0.14% before lunch. Asia: South Korea's KOSPI was up 1.75%. Japan's Nikkei 225 was down 0.98%. India's Nifty 50 was up 1.36%. China's CSI 300 was down 1.68%. Brent crude sank to $106 per barrel this morning. Bitcoin slipped to $79.7K."

"It's not if, but when. That's what Wall Street-and the markets-are saying about Kevin Warsh hiking interest rates. Until a few weeks ago, and certainly prior to the war with Iran, investors had priced in the U.S. Federal Reserve delivering a schedule of interest rate cuts over the next year. After this week's inflation reports, all of that is now off the table. The Consumer Price Index (the main inflation gauge) for April came in at 3.8%, and the Producer Price Index (inflation in wholesale prices) came in at 6%-both above expectations."

"The highly reliable Fed Funds Futures market -where speculators bet on future interest rates-shows that traders believe it's a near-certainty that the Fed will stay on hold until September. After that, dissenting bets tilt toward a rate hike. Prediction market Kalshi has 31% of bettors saying there will be a hike by the end of the year. On Wednesday, the risk premium on 30-year U.S. bonds rose above 5% for the first time since 2007. Investors think interest will rise in the future, in other words."

U.S. stock index futures rose slightly, with the S&P 500 reaching another record high. European markets were modestly higher, while Asian markets showed mixed performance, including gains in South Korea and India and declines in Japan and China. Brent crude fell to about $106 per barrel and bitcoin slipped to around $79.7K. Investors shifted expectations for Federal Reserve policy after inflation data came in above forecasts, with April CPI at 3.8% and April PPI at 6%. Fed Funds Futures indicate the Fed will likely remain on hold until September, with some bets favoring a rate hike by year end. The risk premium on 30-year U.S. bonds rose above 5% for the first time since 2007.

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