🚨 THE WORST-CASE SCENARIO FOR MARKETS IS STARTING TO UNFOLD. The Fed just hiked rates by 25 bps, and Warsh’s message afterward was even more hawkish. • Inflation is “too high” and has stayed above target for too long. • The economy has strengthened and the labor market remains in good shape. • Price stability is now the Fed’s main focus. • Rising bond yields are being driven by economic strength, massive competition for capital and geopolitics. • Warsh refused to rule out further hikes. • Traders are now betting on TWO more rate hikes before year-end. • And Warsh made the Fed’s position clear: “Today’s action starts to show we are serious about this.” The Fed is hiking, bond yields are surging, and more hikes are now being priced in. The message is pretty clear: the Fed is not done tightening yet.