By: Kathryn Rooney Vera, Managing Director and Chief Market Strategist
From the desk of our senior advisor, Jon Hilsenrath.
Overview:
Two important messages came out of the U.S. central bank this week: 1) President Trump’s push for much lower interest rates is likely to face strong opposition from the central bank after Jerome Powell leaves center stage as Fed chairman on May 15; in fact a case is building at the Fed for rates to go up; 2) More broadly, Kevin Warsh, the prospective new chairman, is inheriting an institution that will fight for independent, consensus-driven decision-making, a potential obstacle to his vision of wholesale “regime change.”
Shifting Rate Outlook: Markets are responding accordingly. Importantly, market expectations for where the Fed will land a year from now have shifted. Two-year Treasury yields are above the current fed funds rate target range. Additionally, futures markets place a greater than 30% probability on the fed funds rate being higher in a year; a week ago, the April 2027 fed funds futures contract traded with just a 0.8% probability of a higher rate in a year.
The outlook is shifting quickly. The market has effectively concluded that the inflation problem is not going away in the near term, that Warsh will defy the president’s longstanding demand for short-term rate cuts, and that the rest of the central bank will agree...
To read the full report, subscribe here.
The subsidiaries of StoneX Group Inc. provide financial products and services, including, but not limited to, physical commodities, securities, clearing, global payments, risk management, asset management, foreign exchange, and exchange-traded and over-the-counter derivatives. These financial products and services are offered in accordance with the applicable laws in the jurisdictions in which they are provided and are subject to specific terms, conditions, and restrictions contained in the terms of business applicable to each such offering. Not all products and services are available in all countries. The products and services offered by the StoneX Group of companies involve risk of loss and may not be suitable for all investors. Full Disclaimer. This content is not intended for residents of any particular country, and the information herein is not advice nor a recommendation to trade nor does it constitute an offer or solicitation to buy or sell any financial product or service, by any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law or regulation. Please refer to the Regulatory Disclosure section for entity-specific disclosures. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior written consent of StoneX Group Inc. The information herein is provided for informational purposes only. This information is provided on an ‘as-is’ basis and may contain statements and opinions of the StoneX Group of companies as well as excerpts and/or information from public sources and third parties and no warranty, whether express or implied, is given as to its completeness or accuracy. Each company within the StoneX Group of companies (on its own behalf and on behalf of its directors, employees and agents) disclaims any and all liability as well as any third-party claim that may arise from the accuracy and/or completeness of the information detailed herein, as well as the use of or reliance on this information by the recipient, any member of its group or any third party.
© 2026 StoneX Group Inc. all rights reserved.
Our subscribers have access to comprehensive market analysis from StoneX spanning commodities, equities, currencies and more.
Kevin Warsh's first major test as Federal Reserve chair arrived just as June's jobs report badly missed expectations. The weak print rattled the dollar and opened a fresh window for Japanese intervention, though a single report is unlikely to shift the Fed's broader path.
Australia's latest employment report appeared stronger than expected, but the underlying data tells a more cautious story. Beneath the headline gains, labor market conditions continue to soften, reshaping expectations for Reserve Bank of Australia policy and financial markets.
Investors are rapidly reassessing the outlook for U.S. interest rates as Federal Reserve officials signal a more restrictive stance than markets had anticipated. The shift reflects not only changing policy expectations but also a broader transformation in how the Federal Reserve communicates with financial markets.
Our market expertise, advanced platforms, global reach, culture of full transparency and commitment to our clients’ success all set us apart in the financial marketplace.
Reach
With access to 40+ derivatives exchanges, 180+ foreign exchange markets, nearly every global securities marketplace and numerous bilateral liquidity venues, StoneX’s digital network and deep relationships can take clients anywhere they want to go.
Transparency
As a publicly traded company meeting the highest standards of regulatory compliance in the markets we serve, our financials and track record are matters of public record. StoneX’s commitment to “doing the right thing over the easy thing” sets us apart in the industry and helps us build respect, client trust and new partnerships.
Expertise
From our proprietary Market Intelligence platform to “boots-on-the-ground” expertise from award-winning traders and professionals, we connect our clients directly to actionable insights they can use to make more informed decisions and achieve their goals in the global markets.
