• Markets: Investors did not have a happy hump day. As bond yields rose yesterday following the Fed’s decision to keep interest rates steady despite inflation (more on that below), stocks plunged, giving the Dow its worst day since April 2025.
• Stock spotlight: Hims & Hers fell after the FTC sued the company, claiming it shared users’ health information with advertising platforms, including Meta and Snap. The company denied the allegations.

STEADY, AS SHE GOES

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The Fed keeps acting like a teacher who refuses to answer any questions about what’s going to be on the test. While announcing yesterday that interest rates are staying unchanged, Fed Chair Kevin Warsh continued with his tight-lipped approach to communicating future rate expectations.

But…if one were to guess from the few clues out there, it looks like rate hikes could be on the horizon:

• Yesterday’s decision to keep rates stable wasn’t unanimous. Three regional Fed presidents—out of 12 total members on the committee that sets borrowing costs—voted to hike rates.
• Investors largely expect the Fed to hike rates at its next meeting in September, with some analysts saying surging oil prices reaccelerating inflation will necessitate the move.

For now, though, the Fed held its benchmark rate steady in a range of 3.5% to 3.75%.

Vague king

Still, anyone looking to predict the future isn’t getting big hints from Warsh. The central bank released a concise statement that was almost identical to the one it issued after Warsh’s first rate meeting as Fed chair last month, containing little about its plans other than to “deliver price stability.” The statement noted that the economy is growing “at a solid pace,” despite uncertainty from the Iran war. It also acknowledged that inflation remains above the Fed’s 2% target rate, which it attributes to supply disruptions.

Unlike Warsh’s predecessors, who would often give markets a subtle heads-up regarding impending rate changes, he prefers big-picture statements about monetary policy and having investors guide Fed decisions. He thinks central bankers keeping mum forces government bond traders to interpret the economic situation themselves, which the Fed can use to inform rate moves.

Big picture: The lack of hand-holding from the Fed has led to increased volatility in bond markets and a breakdown in investor consensus about future rates. With less certainty than usual, investors priced in a 30% chance of a rate hike ahead of yesterday’s meeting, according to the FedWatch tool.—SK

      

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