CITIC Securities says incremental takeaways from Fed chair Kevin Warsh’s press
conference were: the Fed has no soft inflation target, will not underreact to
shocks, will consult an inflation task force in coming weeks and “will not
hesitate to act if necessary and conditions are appropriate.” Warsh also said
recent rises in long‑term yields and a spontaneous tightening of financial
conditions provide the Fed with “some comfort.” His tone was procedural—avoiding
overtly hawkish signals while leaving room to tighten. With the Middle East
conflict unresolved, CITIC judges the post‑decision rise in long‑end US yields
and US equity weakness chiefly reflects concern that Trump will “teach Iran a
lesson.” While September hike pricing is understandable given a sharp oil rally,
CITIC argues repeated rounds of signaling should have clarified intentions and
red lines on both sides; assuming oil spikes are temporary and the price
baseline only edges up, it maintains a view the Fed will hold rates through the
year and is more dovish than market consensus.
