The Federal Reserve’s latest 25 basis point rate hike is rippling through markets far beyond what the size of the move suggests. According to The Kobeissi Letter, Fed Chair Kevin Warsh signaled the central bank remains firmly committed to its 2% inflation target regardless of political pressure, and markets are now pricing in a full 100 basis points of additional hikes by next summer. Bond markets have reacted sharply, trading as though the Fed should have raised rates by 50 basis points instead of 25. An attempted intervention by the US Treasury barely moved the needle, a sign Kobeissi called a major shift in sentiment. The average 30-year mortgage rate jumped 17 basis points to 7.45%, its highest level since November 2023.

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