The Federal Reserve raised interest rates yesterday, resisting President Trump’s demands for lower borrowing costs. Fed Chairman Warsh outlined his views on inflation, which he said is still too high, suggesting the central bank may be headed for a rocky relationship with Trump in the months ahead. Adding to the uncertainty is the bond market’s mixed reaction to yesterday’s hawkish pivot and new forecasts from policymakers that additional rate hikes are likely.
The Fed’s Next Chapter May Decide the Fate of the Bull Market
The US stock market is still posting strong gains for the year, but rising Treasury yields, if they continue to move higher, pose a threat to the bull run. A review of the major equity risk factors already shows what could be an early shift in leadership, a shift that could accelerate if interest rates continue rising in the weeks and months ahead.
Inflation Signals Clash Ahead of High-Stakes Fed Decision
The Federal Reserve usually looks through headline measures of inflation and focuses on core readings when adjusting monetary policy and setting its target rate. The reasoning is that core inflation generally does a better job of capturing the underlying trend of price changes and ignores short-term noise. The challenge is deciding whether this time is different.
Treasury Yield Premium Surges Amid Inflation and Debt Worries
The bond market continues to demand a higher risk premium, based on fair-value estimates for the US 10-year Treasury yield. Driven by concerns about sticky inflation and mounting government debt, the benchmark rate’s spread over fair value in August rose to its highest level since January 2025.
Book Bits: 12 September 2026
● Money to Burn: The Unvarnished Truth About Leon Black, Apollo, and the Rise of a New Wall Street
William D. Cohan
Review via Semafor
Apollo founder Leon Black’s career started falling apart in October of 2020, when The New York Times revealed that he’d been one of Jeffrey Epstein’s main financial patrons, relying on the criminal long after others had abandoned him.
The veteran finance writer Bill Cohan’s new 673-page Black biography, Money to Burn: The Unvarnished Truth About Leon Black, Apollo, and the Rise of a New Wall Street, offers a very different narrative of a brilliant finance pioneer laid low by a combination of lust and naïveté — but not by any serious complicity with Epstein in his darker schemes. Cohan told me he views it in part as a rebuttal of a strain of Times reporting he referred to in an interview as a “Leon jihad.”
Are Rising Treasury Yields Part of Warsh’s Inflation Strategy?
Is the bond market Federal Reserve Chairman Kevin Warsh’s preferred inflation-fighting tool via higher Treasury yields? Although he hasn’t explicitly said he wants long rates to rise to do the heavy lifting for the central bank in taming price pressures, he’s hinted at the possibility in recent comments. If that’s the strategy, the central bank may be comfortable with rising yields as a mechanism for cooling inflation while reducing pressure on policymakers to raise short-term rates and avoid, or at least minimize, the wrath of President Trump, who has demanded that the Fed cut rates.
Bond Market’s Verdict on Washington Is Turning Harsher
Treasury Secretary Scott Bessent is playing a dangerous game. By tempting the bond market to effectively test his resolve, he’s putting his own credibility, and that of his agency, on the line. His strategy could ultimately draw in the Federal Reserve, which may soon be pressed to tighten monetary policy to counteract the blowback from a bond market that continues to push Treasury yields higher.
A Two-Story Market: AI Optimism and Iran Fear Power US Stocks
Energy and technology remain the dominant engines of performance for the US stock market this year. That’s another way of saying that the Iran war and AI are the primary factors lifting broad measures of American equities in 2026.
The Economy Appears to Be Heating Up. So Are the Headwinds
Pressures appear to be building for the US economy, but the warning signs look less severe when viewed through third‑quarter GDP estimates. The debate now turns on whether the current acceleration in economic activity signals continued resilience into Q4 and 2027, or instead marks a near‑term peak before several strengthening risk factors begin to take a toll.
Cheers to the Hands, Brains, and Engines Behind the Economy
Happy Labor Day!