Chair Warsh Makes Fed Debut, Opportunity In the Credit Market | Real Yield 6/18/2026

Watch on YouTube ↗ | June 18, 2026 at 18:37 | 44:16 | Bloomberg Markets

Speakers

Mark Cabana — Co-Head of U.S. Short Rate Strategy, BofA Securities

Jamie Patton — Co-Head of Global Rates, TCW

Amanda Lynam — Chief Credit Strategist, Goldman Sachs

Danielle Poli — Head of Content, The Block

Erin Hudson — Financial Analyst

Unidentified JPMorgan — Strategist

Summary

New Fed Chair Kevin Warsh surprised markets with a hawkish hold, boosting short-term yields and rate-hike expectations. Panelists saw opportunities in paying the two-year Treasury, flattening the curve, and owning front-end duration with options for volatility. In credit, strategists favored triple-B IG bonds and private credit as AI-driven supply and strong demand continued.

Fed under Chair Warsh holds rates but signals hawkishness; half of committee expects hikes.
Short-term yields surge; two-year Treasury yield up as much as 16 bps.
Markets reassess Fed independence after Warsh’s debut.
TCW’s Jamie Patton sees Fed on hold, likes long front-end duration and options for volatility.
BofA’s Mark Cabana recommends paying two-year rates and curve flattening on hawkish Fed.
Credit markets see massive AI-related issuance from Nvidia and SpaceX.
Goldman’s Amanda Lynam favors moving down in IG quality to triple-B bonds on supply technicals.
Oaktree’s Danielle Poli sees attractive private credit opportunities amid scarcer capital.
Public school budget pressures may create opportunities in municipal bonds if credit weakens.

Ideas

Mark Cabana Co-Head of U.S. Short Rate Strategy, BofA Securities 8:26

Hawkish Fed, pay two-year, flatten curve.

The Fed under Warsh is hawkish and serious about bringing inflation to 2%, with nine members projecting rate hikes. Policy is not broadly restrictive outside housing, and the lack of forward guidance increases uncertainty. This supports paying the two-year rate and curve flattening trades, as short-end yields have room to rise and the curve has more flattening potential.

Mark Cabana Co-Head of U.S. Short Rate Strategy, BofA Securities 8:26

Hawkish Fed, pay two-year, flatten curve.

The Fed under Warsh is hawkish and serious about bringing inflation to 2%, with nine members projecting rate hikes. Policy is not broadly restrictive outside housing, and the lack of forward guidance increases uncertainty. This supports paying the two-year rate and curve flattening trades, as short-end yields have room to rise and the curve has more flattening potential.

Jamie Patton Co-Head of Global Rates, TCW 14:19

Rates volatility rising, own options.

The Fed's lack of forward guidance, crosscurrents from growth, AI, and inflation uncertainty will increase rates volatility. Buying options against higher rates benefits from both tail-risk protection and elevated volatility, making options particularly attractive.

Jamie Patton Co-Head of Global Rates, TCW 15:12

Fed on hold, long front-end duration.

The Fed will remain on hold; one or two hikes priced in represent only a 10–20% probability of a full hiking cycle. Energy-driven supply-shock inflation is not controllable by the Fed, and hiking into it would be a policy mistake. With trimmed mean inflation at 2.3% and inflation expectations anchored, hikes will be priced out, benefiting long front-end duration positions.

Amanda Lynam Chief Credit Strategist, Goldman Sachs 28:30

Overweight triple-B IG corporate bonds.

Heavy supply of high-grade debt from hyperscalers and AI-adjacent companies is improving the average rating of the IG universe but weighing on high-grade technicals and compressing spreads at the top. Investors should move down in quality within IG to the triple-B cohort, where supply dynamics are more favorable and additional spread is available.

Danielle Poli Head of Content, The Block 29:47

Private credit offers opportunities, deploy.

Capital is becoming scarcer in private credit as retail money exits, creating more abundant investment opportunities. Oaktree is holding ample liquidity and a conservative posture to deploy into sub-investment grade private credit as maturity walls approach, providing high single-digit yields and potential for opportunistic returns.

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This Bloomberg Markets video, published June 18, 2026, features Mark Cabana, Jamie Patton, Amanda Lynam, Danielle Poli discussing 2-year U.S. Treasury yield, Yield curve flattening (2s10s), Interest rate options (volatility), Front-end U.S. Treasury yields (2-year), Triple-B rated IG corporate bonds, Private credit (sub-investment grade loans). 6 trade ideas extracted by AI with direction and confidence scoring.

Speakers: Mark Cabana, Jamie Patton, Amanda Lynam, Danielle Poli · Tickers: 2-year U.S. Treasury yield, Yield curve flattening (2s10s), Interest rate options (volatility), Front-end U.S. Treasury yields (2-year), Triple-B rated IG corporate bonds, Private credit (sub-investment grade loans)