What a Warsh Fed Could Mean for 10-Year Yields

Añadido: 2026-05-05

[00:00:00]On Tuesday, April 21st, confirmation hearings for Fed chairman appointee Kevin Warsh began in the Senate. The results could have major implications for interest rates across the yield curve. Now, after the initial hearing, senators can still submit written questions before a final vote, so conclusion may still be a few weeks away.

[00:00:18]10-year yields will be a particular market focus through this process. Now, they rose sharply in the wake of the Iran conflict, moving from 3.96 at the start of the conflict to a recent high of 4.44 by the end of March.

[00:00:31]Now, the tailwind appears to be twofold.

[00:00:33]First, rising oil prices stoked renewed inflation concerns, making longer duration bonds less attractive to hold.

[00:00:39]Second, markets began pricing in the prospect of additional Treasury supply needed to finance a conflict that could run longer than initially anticipated.

[00:00:48]Now, April's told somewhat different story. 10s have pulled back to around 4.26 to 4.29 area, and many analysts believe that this reflects a growing conviction that the conflict is nearing resolution, and that oil may return to levels that no longer threaten the inflation picture.

[00:01:06]Then there's the question of where the presumptive new chairman actually stands on policy. Critics point to his publicly hawkish posture from a decade ago, when the Fed debated balance sheet expansion.

[00:01:16]Others argue his views have evolved, citing a simpler logic. A president who has vocally demanded lower rates would presumably choose a Fed chair aligned with that preference. Whether that reasoning holds up under the Senate questioning is exactly what the market will be watching.

[00:01:31]Now, if a trader believes the 10-year yields will rise from here, they could express that by buying the April 10-year yield contract at 4.29, and targeting a move back to the March highs of 4.44.

[00:01:43]Now, stop for this trade could be placed below at 4.19. [music] This trade can make $150 if the target is reached, and risks $100 if you stop there at your level.

[00:01:52]Now, if a trader believes that yields will fall from here, they could sell the April 10-year yield contract at 4.29, >> [music] >> and target a move to the February lows of 3.97.

[00:02:02]A stop for this trade could be placed above at 4.39. [music] Now, this trade can make $320 if the target is reached, and risks $100 if you stop there at your level.