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Kevin Warsh's Fed nomination widens Treasury curve as balance sheet plan clashes with Trump's rate goals
On January 31 2026, Kevin Warsh's nomination to lead the Federal Reserve pushed the 30-year versus two-year Treasury yield spread to 1.35 percentage points, close to its widest level since 2021. Warsh favors reducing the Fed's roughly $9tn bond portfolio, while Donald Trump is pressing for lower long-term interest rates, creating tension over how policy should be set. Investors still anticipate two quarter-point interest rate cuts starting in the summer even as large asset managers highlight the difficulty of shrinking the balance sheet and easing rates at the same time.