Bank of America economists argued that Warsh, just as he did in June, often sidestepped reporters’ questions. By opening the door to alternative measures of inflation and suggesting that financial markets are already doing some of the tightening, his tone came across as dovish. <\/p>\n
“All hat, no cattle,” wrote BofA economist Aditya Bhave and his team, invoking the Texas expression to suggest hard rhetoric wasn’t matched by action. <\/p>\n
“We don’t think the Fed can get markets to do its work indefinitely by just talking tough,” they wrote. “It has to eventually walk the talk, or risk losing credibility.” <\/p>\n
In an effort to reestablish credibility, BofA economists expect the Fed to hike by 25 basis points in September, followed by two similar increases in 2026. <\/p>\n
Since the start of the year, the 10-year Treasury (^TNX<\/a>) yield has climbed roughly 48 basis points to 4.64%. The 30-year Treasury has gained roughly 37 basis points to 5.2%, according to Yahoo Finance’s AlphaSpace data.<\/a> <\/p>\n The rise in yields, which move inversely with bond prices, reflects growing fear that the Federal Reserve isn’t being aggressive enough with inflation, prompting investors to demand higher returns to lend money over longer periods. <\/p>\n “The single most important factor driving Treasury yields is expectations about what the Fed will do,” said Richard Clarida, PIMCO managing director and former Fed vice chair, though he noted other factors can also influence yields. <\/p>\n For the stock market, rising long-dated Treasury yields mean financing costs are increasing across the board, from mortgage rates to corporate financing for AI. <\/p>\n “He [Warsh] is a little bit between a rock and a hard place,” Barbara Doran, CEO of BD8 Capital Partners, told Yahoo Finance. <\/p>\n “The implication for higher yields is not a good one for anyone holding debt,” she added. <\/p>\n Meanwhile, after recent weakness in chips and a midweek sell-off, stocks rebounded Thursday and Friday as blowout earnings from Microsoft (MSFT<\/a>) and Amazon (AMZN<\/a>) reinforced confidence in a resilient economy and strong AI investments. Markets continued to rise<\/a> ahead of SpaceX (SPCX<\/a>) earnings on Tuesday. <\/p>\n Earnings have broadly impressed, with FactSet data showing the S&P 500’s gspc (^GSPC<\/a>) second quarter net profit margin on track to reach 15.7% \u2014 the highest since the firm began tracking the metric in 2009. <\/p>\n “There’s a real reckoning ahead of us here,” Darius Dale, CEO of 42 Macro, told Yahoo Finance on Friday. <\/p>\n “We don’t think the bull market is necessarily over,” he said, “but we don’t believe that this tradable low is something that’s going to prove durable when you look out three to four months because again, this is a Federal Reserve that’s going to have to act to catch up to gain some of that inflation-fighting credibility.” <\/p>\n Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre<\/a>. <\/p>\n Click here for in-depth analysis of the latest stock market news and events moving stock prices<\/strong><\/a> <\/p>\n Read the latest financial and business news from Yahoo Finance<\/strong><\/a> <\/p>\n <\/a> Federal Reserve Chairman Kevin Warsh holds a press conference following a two-day meeting of the Federal Open Market Committee on July 29, 2026. (Reuters\/Evelyn Hockstein\/File Photo) \u00b7 Reuters \/ REUTERS <\/p>\n