- Bank of America strategists said Warsh needs to reinforce his inflation-fighting stance while supporting Bessent’s efforts to contain long-term borrowing costs.
- A successful policy signal would flatten the yield curve, support risk appetite and strengthen the dollar; a failure would push long-term yields higher, pressure the dollar and favor defensive stocks.
- US stocks recorded $4.4 billion of outflows in the week through Aug. 26, while Japanese stocks and investment-grade bonds attracted funds.
Quotes
“To achieve a “bull success,” Warsh will have to reinforce his inflation-fighting credentials to keep short-term yields in check, while signaling support for Treasury Secretary Scott Bessent’s efforts to contain longer-term borrowing costs”
“A “policy failure,” however, could send yields above levels seen before Bessent communicated his buyback campaign in longer-dated Treasuries earlier this month.”