Wall Street Eyes July 29 as Fed's Warsh Faces Congress Amid Rate Hike Alarm

Warsh's congressional debut puts every FOMC meeting on the table

Federal Reserve Chair Kevin Warsh will deliver his inaugural semiannual monetary policy testimony before the House Financial Services Committee on July 14, just two weeks before the next scheduled FOMC decision on July 29.reuters The appearance comes as Wall Street banks sharply revised their rate outlooks following Warsh's first meeting, where nine of 18 FOMC members penciled in at least one rate hike for 2026, up from zero just six weeks earlier.247wallst With CPI running at 4.2% annually — a three-year high — the testimony is shaping up as the most consequential near-term macro catalyst for equity and bond markets.cnbc

BofA and Deutsche Bank flip to hikes

Bank of America reversed a week-old forecast this month, now projecting 75 basis points of tightening across three meetings — September, October, and December — lifting the benchmark federal funds rate from its current 3.75% upper bound toward a 4.25%–4.50% range.yahoo BofA economist Aditya Bhave cited resilient labor markets and stubborn inflation, noting that "the Fed's inflation problem has gotten unambiguously worse" as housing-driven disinflation runs its course and other core services remain sticky.yahoo A July hike, Bhave added, "is in play," though the bank considers it more likely that Warsh waits for summer data before acting.yahoo

Deutsche Bank also moved to a hawkish footing in a June 19 research note, forecasting two quarter-point hikes in September and December.reuters The bank acknowledged a dovish scenario in which easing energy prices reduce urgency, but flagged the possibility that the FOMC could "coalesce around a July rate hike" if inflation data remain elevated.yahoo CME FedWatch odds reflect that uncertainty: traders currently assign a 72.8% probability of a hike by September, rising to 80.6% by October and 87.9% by December.yahoo

JPMorgan flags July 29 as a live date

JPMorgan Asset Management CIO Bob Michael told CNBC's Closing Bell Overtime that every Fed meeting is now a live potential hike, including July 29.247wallst Michael said Warsh signaled he was "tearing up the script" on Fed communications and launching workstreams to review core operational areas — a break from the deliberate, data-telegraphing style of his predecessors.247wallst The 2-year Treasury yield climbed to 4.20%, a 16-month high, reflecting investor conviction that the easing cycle has definitively ended.msn

The energy-driven nature of May's inflation surge offers some nuance. Core CPI, which strips out food and energy, rose just 0.2% for the month and 2.9% year over year, well below the headline figure, suggesting underlying price pressures remain more contained.cnbc Still, with the Fed's preferred gauge — core PCE — at cycle highs and Warsh having publicly questioned whether monetary policy is even restrictive, traders and analysts are treating each data release and each Warsh public appearance as a potential market mover ahead of the July 29 decision.247wallst +1