Markets are zeroing in this week on Kevin Warsh’s appointment as Fed Chair and how the central bank will handle resurgent inflation. US Treasury yields are climbing, and X discussions around the Fed, ECB, and inflation are heating up.

Warsh Takes Over — Markets Ask How the Fed Will Measure Inflation

Kevin Warsh was sworn in as Fed Chair on Monday, and markets are already focused on whether he will shift to Trimmed Mean PCE instead of the traditional Core PCE. Several voices on X argue the change could understate measured inflation and influence rate decisions.

Treasury Yields Rise — Fed “Behind the Curve”

The 10-year Treasury yield reached 4.6% and the 30-year hit 5.12% after the US sold $691 billion in Treasuries this week. Analysts on X note that the Fed is “behind the curve” and that a second wave of inflation is already visible.

ECB Expected to Hike Rates in June

ECB Governing Council member Yannis Stournaras said a small rate hike could temper inflation without damaging the economy. Analysts on X expect two 25bp hikes in June and September, driven mainly by oil-price shocks.

Bottom Line

X discussion around the Fed and ECB now centers on resurgent inflation, possible changes to how it is measured, and expectations for further rate hikes in Europe. There is still no significant mention of the Bank of Israel in this conversation. The main risks stem from the volatility expected around upcoming Fed and ECB decisions.