Markets punish Warsh hold as bond yields surge and stocks slide

After the Fed left rates at 3.5%, traders questioned its credibility as the bond market rallied yields to multi‑year highs (the 30‑year around 5.23%) and stocks fell, with the S&P 500 dropping about 1.5% and the Nasdaq in correction territory. Traders also pushed the odds of a September rate hike higher (roughly two‑thirds of futures), while Warsh’s remarks were seen as unclear, prompting commentary about a credibility shock for the Fed. Ongoing geopolitical tensions pushed Brent crude above $90/barrel, adding to the backdrop of inflation concerns.