The Fed seems to have fully shifted to a structurally strong hawkish stance. The Federal Reserve announced its June rate decision and held the first press conference of its new chairman, Kevin Warsh. The meeting focused on two key points: - Keeping rates unchanged, with a unanimous 12-0 vote, which also shows Warsh's absolute control over the committee right after taking office, dispelling earlier speculation about internal conflicts. - The rate futures market has completely overturned previous rate-cut fantasies. The latest pricing now fully expects a 25 to 30 basis point rate hike by the end of the year. Among the 18 officials who submitted forecasts, 9 expect at least one rate hike by year-end. Beyond the data, as mentioned before, Warsh has erased all forward guidance and dovish language hinting at future rate paths from the past few years, fully returning to the strategic ambiguity style of former Fed Chair Alan Greenspan. As for whether there will be a rate hike, at least in my view, the probability is low. Judging from last night's logic and market performance, Warsh's real intention seems to be using the expectation of a rate hike to replace an actual rate hike, and this approach is likely to be employed for a long time. In macroeconomics, there's a term called "expectation management tightening." Warsh aims to push up U.S. Treasury yields and tighten financial conditions by releasing extremely hawkish signals and rate hike threats. As long as the market does the equivalent of a rate hike for him, the Fed might not need to actually raise rates in practice. The Fed remains verbally hawkish, significantly raising its PCE inflation forecast to 3.6% and removing all dovish forward guidance to pave the way for this approach. But most likely, rates will remain unchanged at 3.50% to 3.75% for a long time.