IBM’s Gary Cohn on Warsh’s Fed, Yen Intervention, Markets

Watch on YouTube ↗  |  August 03, 2026 at 12:55  |  13:53  |  Bloomberg Markets
Speakers
Gary Cohn — Vice Chair, IBM / Former NEC Director

Summary

Gary Cohn discusses Fed Chair Kevin Warsh’s shift away from forward guidance, arguing the market is now doing the Fed’s job by steepening the yield curve. He notes that long-end rates are rising due to heavy Treasury supply and an upcoming wave of AI-related debt issuance. Cohn also covers US-Japan yen intervention, seeing it as multifactorial rather than a single driver for yields. He highlights mounting instability from AI capex consuming Big Tech’s free cash flow, a bifurcated US consumer, and numerous simultaneous macro risks.

  • Fed under Warsh is returning to pre-2008 opacity, reducing forward guidance.
  • The 2s10s yield curve has steepened 60bp and is expected to continue steepening.
  • Long-term rates are being pushed higher by heavy Treasury supply and future AI-related debt.
  • Coordinated yen intervention by US and Japan considers multiple factors including trade balances.
  • Large US tech companies are sacrificing free cash flow for AI infrastructure spend.
  • Market instability is elevated with wars, oil prices, AI capex, and consumer bifurcation all at play.
  • Cohn sees rate-hedging as well-developed and argues markets must manage own risk without relying on the Fed.
Ideas
Gary Cohn Vice Chair, IBM / Former NEC Director 2:43
Yield curve steepening will continue.
The Fed under Chair Warsh is moving away from explicit forward guidance, letting markets do the tightening. The yield curve has steepened dramatically (2s10s from -20bp to +40bp) and will continue to steepen as long-term rates rise, driven by heavy Treasury supply, AI-related debt issuance, and the market pricing in more risk premium. This environment makes borrowing more expensive and is effectively doing the Fed’s inflation-fighting job, so the curve steepening trend is intact and likely to persist.
US yield curve steepener (2s10s) HIGH
Gary Cohn Vice Chair, IBM / Former NEC Director 8:17
Big Tech losing free cash flow.
Large US tech companies that historically generated massive free cash flow are now spending enormously on AI infrastructure, becoming huge asset builders instead. This is eroding their free cash flow to the point where companies are now discussing staying positive on free cash flow – an unprecedented negative shift. The market is still digesting this fundamental change, which adds to instability and makes these mega-cap tech stocks less attractive.
XLK MED
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This Bloomberg Markets video, published August 03, 2026, features Gary Cohn discussing US yield curve steepener (2s10s), XLK. 2 trade ideas extracted by AI with direction and confidence scoring.

Speakers: Gary Cohn  · Tickers: US yield curve steepener (2s10s), XLK