powell’s term expired friday. kevin warsh inherits 3.8 percent CPI, 6 percent PPI, and a bond market pricing in rate hikes not cuts. good lu

powell's second term as chair expired friday may 15. kevin warsh was confirmed by the senate may 13 in a 54 to 45 vote, the narrowest margin since 1977. warsh told the senate banking committee he wants "regime change" at the fed including changing how the central bank measures inflation.

he walks into this:

inflation is accelerating. CPI 3.8 percent in april, the highest since may 2023. PPI 6 percent annual with wholesale gasoline up 15.6 percent in a single month, driving over 40 percent of the april goods increase. core CPI 2.8 percent.

bond market already moved. 30 year yield at the highest level since may 2025, approaching territory not seen consistently since before 2008. traders are fully pricing in one fed rate hike by march, with more than a 50 percent chance rates rise before the end of 2026.

bank of america's aditya bhave said may 8: "the data simply don't warrant cuts this year. core inflation is too high, and moving up." BofA now forecasts no rate cuts until july 2027 (revised from september 2026). jpmorgan's michael feroli forecasts zero cuts in 2026 and the next move being a 25bp hike in Q3 2027.

the iran war is week 11. hormuz is still blocked. trump rejected iran's MOU counter-proposal on may 10 and 11 as "totally unacceptable." iran says it will "never bow." iran's parliament is now discussing weapons-grade enrichment if conflict resumes. project freedom paused may 6. no signed diplomatic path forward.

separately, the US approved nvidia h200 sales to about 10 chinese firms in january with a 25 percent fee, but beijing is blocking the imports to push domestic huawei ascend. anthropic published "2028: two scenarios for global AI leadership" on may 14 framing this exact dynamic as the global AI inflection point.

warsh argues AI productivity gains create room to cut. the data and the bond market disagree. the new chair's first FOMC is june 17.