Warsh's hawkish stance tests the Fed as bond-market red flags flare

Fed Chair Kevin Warsh’s hawkish insistence that inflation can be tamed without signaling rate hikes spooked the bond market, pushing long-term yields higher and forcing a choice between bowing to Trump’s desire for easier policy or backing a tightening bloc; he also signaled a potential rethink of the Fed’s 2% inflation target as he seeks outside expert input ahead of Jackson Hole, even as June PCE shows inflation cooling to 3.7% with core at 3.3%, keeping the policy path unsettled amid geopolitical risks and AI investment.