What makes him complicated for crypto is that he's not entirely against it. Warsh invested in [firms] behind a spot Bitcoin ETF, and in Electric Capital, a crypto-focused venture firm. He has called Bitcoin a "policeman" that keeps central banks honest. But his policy preferences—tighter money, higher real interest rates, and a smaller Fed balance sheet—are exactly the conditions that pull capital out of risk assets and back into bonds.
February's ISM Manufacturing PMI surprised to the upside at 52.4, marking a second consecutive month in expansion territory. At the same time, the prices subindex reached its highest level since mid-2022, highlighting mounting cost pressures. Sticky inflation risks reduce the scope for near-term rate cuts and reinforce support for longer-dated Treasury yields.
Market volatility is high, with the VIX index up 5% in today's session. The latest inflation data came in better than expected, offering what should become relief for markets. Consumer prices rose 2.4% year over year last month, a cooler reading that brings inflation back toward levels last seen in mid-2025. As the gauge edges closer to the Federal Reserve's 2% target, expectations for an eventual rate cut are likely to gain momentum, even as this week's labor market data reflected strength.
