Who Cares What Warsh Thinks

The TS Lombard team argues that a resilient US economy and labour market reacceleration will force the Fed to hike rates significantly more than the market expects. Consequently, they anticipate a flatter yield curve and sustained US dollar strength.

Key Takeaways

• 1.The Fed is expected to hike once in 2026 and on a quarterly schedule in 2027, leading to a much higher terminal rate than market expectations.
• 2.US domestic inflation is being driven by a reaccelerating labour market and supply constraints, rather than just energy shocks.
• 3.Expect a flatter yield curve and sustained USD upside, though the rally's intensity may be capped by geopolitical instability and global reflation.

Table of Contents

• Who Cares What Warsh Thinks?
• US Savings Rate
• US Labour Market Tigh
• US Corporate Profil
• US: Labour Tightness V
• A still fragile dollar bid?
• Job Market Reacceler
• The Fed Moves When T
• USD Bull/Bear Indicator
• DXY and DXY Weighted 2y Rate differential

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