Name: Fed Holds Rates Steady As Warsh Takes Helm: Fed Special
Uploaded: 2026-06-17T21:03:48+00:00
Duration: 1988 s

Speakers

Jim Bianco — President, Bianco Research

Kate Moore — Head of Thematic Strategy, BlackRock

Jeffrey Rosenberg — Senior Portfolio Manager, BlackRock

Lisa Abramowicz — Anchor, Bloomberg Television and Radio

Stephanie Roth — Senior Economist, Wolfe Research

Summary

Bloomberg's Scarlet Fu and Lisa Abramowicz cover the first Federal Reserve policy decision under new Fed Chair Kevin Warsh, who held rates steady but revealed a hawkish tilt with a drastically shorter statement, no forward guidance, and a split committee. The announcement triggered a sharp flattening of the yield curve, a selloff in equities, and a rally in the dollar. Guests from Citi, Bianco Research, Wolfe Research, and BlackRock debate the implications for bonds, equities, credit, and the future of Fed communications.

Fed holds rates unchanged, nine members project at least one quarter-point hike this year.
New Chair Warsh initiates task forces to review communications, balance sheet, and inflation framework.
Statement slashed from 341 words in April to just 131 words, press conference shortened.
Two-year yield surges nearly 15 bps, yield curve compresses most since April 2025.
Equities decline and dollar strengthens as markets price a hawkish shift.
Jim Bianco argues Fed vigilance is ultimately positive for long-duration bonds.
Kate Moore stays underweight duration, prefers equities over credit, and favors large caps over small caps.
Jeffrey Rosenberg highlights AI capex as support for risky assets despite tighter Fed, and warns against overplaying curve flattening.

Ideas

Jim Bianco President, Bianco Research 14:24

Hawkish Fed ultimately good for long bonds.

A Fed that is committed to fighting inflation and is vigilant about price stability should ultimately be positive for long-duration bonds, because it anchors long-term inflation expectations and prevents runaway yields. The historical example of 2022 shows that when the Fed panicked and hiked aggressively, bond investors were able to hold in. Today's hawkish message from Chair Warsh reinforces that the Fed will not let inflation get out of control, which is good for long bonds over time.

Kate Moore Head of Thematic Strategy, BlackRock 15:40

Prefer equities over expensive credit.

Rate-sensitive smaller companies that need to borrow will face headwinds as the rates trajectory is not lower in the near term, and best case is flat. In contrast, large-cap earnings growth is not rate-coupled. Portfolios should tilt toward larger companies and away from small caps that would suffer from higher-for-longer borrowing costs.

Kate Moore Head of Thematic Strategy, BlackRock 15:40

Prefer equities over expensive credit.

Equities have experienced a step down in valuations due to strong earnings growth outpacing price moves, while corporate credit valuations remain near 15-year highs. Citi prefers taking risk-asset exposure in equities over credit, positioning portfolios accordingly throughout the year.

Jeffrey Rosenberg Senior Portfolio Manager, BlackRock 23:03

Yield curve flattening trade looks overdone.

The initial flattening of the yield curve in response to the hawkish statement may be overdone because the real hawkish signal could be on the Fed's balance sheet, not on rates. Balance-sheet tightening could steepen the curve, creating a risk of overplaying the flattening trade.

Kate Moore Head of Thematic Strategy, BlackRock 29:17

Avoid rate-sensitive small caps, favor large caps.

Fed Holds Rates Steady As Warsh Takes Helm: Fed Special

Summary

Ideas

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