Warsh Restores Some Fed Credibility: 3-Minutes MLIV
Speakers
Mark Cudmore
— Executive Editor, Bloomberg Live / Macro Strategist
Summary
Mark Cudmore argues that Kevin Warsh's Jackson Hole speech repaired Fed credibility after July's FOMC damage. He says this supports stocks longer term despite higher yields, expects sticky inflation to force higher Treasury yields eventually, and dismisses yen intervention risk around 160.
- Mark Cudmore says Warsh overdelivered and repaired credibility damaged by the July FOMC.
- He views higher yields as reflecting restored Fed credibility and a hot economy, ultimately good for stocks.
- Cudmore pushes back on the disinflation camp and expects sticky inflation to lead to higher yields eventually.
- He says oil and other supply-side commodity pressures are not the Fed's main inflation concern.
- September FOMC cut remains in play at roughly 60% market pricing.
- He sees no dollar-yen intervention risk and calls the 160 level arbitrary.
Ideas
Fed credibility repair ultimately supports stocks.
Kevin Warsh overdelivered at Jackson Hole and repaired Fed credibility after the July FOMC damage; even though that means higher yields and short-term disruption for stocks, those higher yields are for good reason—credibility restoration and a hot economy—so the outcome is ultimately good for stocks.
Expect higher Treasury yields eventually, not rushed.
The disinflation camp has been wrong for multiple years, and inflation has not been near target; supply-side commodity pressures are not the main issue, while demand-side inflation matters more, so the market will probably have to see higher U.S. Treasury yields eventually, though there is no rush.
No yen intervention risk at 160.
Dollar-yen is not seeing disorderly moves, so intervention risk is not relevant; the 160 level is arbitrary and people watching 160, 161, 162 are just counting numbers, so there is no reason to watch for Bank of Japan intervention this week.
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This Bloomberg Markets video, published August 31, 2026, features Mark Cudmore discussing STOCKS, U.S. Treasury yields, USD/JPY. 3 trade ideas extracted by AI with direction and confidence scoring.
Speakers: Mark Cudmore · Tickers: STOCKS, U.S. Treasury yields, USD/JPY