Wash is about to be sworn in as the chairman of the Federal Reserve. The market hawkish signal continues to heat up. Director Waller said that the probability of a rate hike or cut is "50-50".

On Friday, US President Trump will preside over the swearing-in ceremony of Kevin Warsh as the Chairman of the Federal Reserve. The 56-year-old Warsh will become the 11th Chairman in the modern history of the Federal Reserve, succeeding Powell, who led the Federal Reserve for 8 years. It is worth noting that Powell will continue to serve as a member of the Federal Reserve Board after stepping down as Chairman, marking the first time in nearly 80 years that a Federal Reserve Chairman will continue to serve as a board member after stepping down. Market participants point out that Warsh is taking office at a time when the Federal Reserve is facing one of the most complex policy environments in recent years: on one hand, conflict in the Middle East is pushing up oil prices and reigniting inflationary pressures; on the other hand, US economic growth is slowing, while Trump continues to demand that the Federal Reserve lower interest rates. However, based on recent statements from Federal Reserve officials and market pricing, the overall stance within the Federal Reserve is clearly shifting towards hawkish. Warsh previously served as a member of the Federal Reserve and participated in joint efforts between the Federal Reserve and the US Department of the Treasury to rescue the market during the 2008 global financial crisis. However, after leaving the Federal Reserve, he gradually shifted towards criticizing the Federal Reserve's long-term maintenance of loose policies during the crisis period, and believed that the Federal Reserve had "over-expanded its responsibilities" in recent years on issues such as climate change and social equality. Warsh has stated that he hopes to reduce the Federal Reserve's influence on the market. Despite Trump's long-standing public criticism of Powell for not being aggressive enough in lowering interest rates, the market is increasingly inclined to believe that the Federal Reserve will not only refrain from lowering rates in the near future, but may even raise rates again. Interest rate futures markets indicate that investors are now beginning to factor in the possibility of a 25-basis-point rate hike by the Federal Reserve this year. Meanwhile, hawkish voices within the Federal Reserve continue to strengthen. Warsh stated clearly on Thursday that the Federal Reserve needs to send a clear signal to the market: in the future path of interest rates, the probabilities of "raising rates" and "lowering rates" are currently completely equal. Warsh warned that if inflation cannot return to a downward trajectory in the short term, he would not rule out the possibility of further rate hikes in the future. He also stated his support for removing language in future policy statements that imply a "dovish bias." Warsh emphasized that the outlook for inflation remains the key factor determining the direction of monetary policy. He noted that if there are signs of "unanchored" long-term inflation expectations, he would not hesitate to support raising the federal funds rate target range. After Warsh's speech, US Treasury yields quickly underwent a V-shaped reversal. The yield on the 10-year US Treasury note rose back above 4.57%, after falling to a intraday low of 4.5241%; the yield on the 2-year US Treasury note rose to 4.1231%, with an intraday increase of about 3.7 basis points. At the same time, the precious metals market came under pressure. Spot gold fell below $4500 per ounce, while spot silver fell to around $75 per ounce. Analysts point out that Warsh's upcoming appointment, the expanding camp of hawks within the Federal Reserve, and the inflationary pressures stemming from the Middle East conflict are reshaping market expectations for US monetary policy. While Warsh himself has indicated a desire to control inflation while also lowering rates, the internal atmosphere within the Federal Reserve has clearly shifted from "when to lower rates" to "whether there is a need to raise rates."