Warsh’s Senate testimony boosts US 10Y yields, dims Fed rate cut hopes

Kevin Warsh’s Senate testimony has moved US 10-year Treasury yields, and the Polymarket odds of a 25 basis point Fed rate cut after the April meeting now sit at 0.2% YES, up from 0% yesterday.

Warsh struck a hawkish tone, stressing inflation control and Fed independence, which fits with rising Treasury yields. Traders responded by pulling back rate cut expectations. The 25 bps market moved from 0% to 0.2% YES, while the 50+ bps market holds at 0.1% YES. Warsh’s confirmation is still uncertain, which keeps this a live variable.

Trading volume is at $3,074 in actual USDC for the 25 bps market, with $5,326 needed to move the price 5 points, indicating moderate liquidity. The largest price move was negligible, pointing to caution rather than conviction among traders. The 50+ bps market is thinner still, requiring $17,838 to move 5 points.

Warsh’s testimony is a noticeable shift but not a turning point yet. Rising Treasury yields and his focus on inflation control both point toward a reduced likelihood of near-term cuts. At 0.2¢, a YES share on a 25 bps cut pays $1, a 500x return. That payout only makes sense for traders betting on a dramatic economic downturn or an unexpected dovish reversal.

Watch for upcoming statements from Powell and other FOMC members. Whether they echo or break from Warsh’s position will shape market bets heading into the April meeting.

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