Markets flip the script on Warsh’s Fed as risk appetite returns

Markets have reversed the earlier tightening narrative tied to Fed chair Kevin Warsh, with Wall Street signaling ease even though policy stayed unchanged. Bloomberg’s financial-conditions gauge rose to its loosest level since 1996, while the S&P 500 gained about 7% since July 29, the VIX fell to year-lows, and junk-bond borrowing costs eased—even as long-term yields rose. The backdrop suggests rising risk appetite on Wall Street, potentially complicating Warsh’s task of cooling the economy if such conditions persist.