Warsh Confirmation Sparks Broad Selloff as S&P 500 Falls Back From 7,500

3 articles · Updated · MarketPulse · May 15

Kevin Warsh’s Senate confirmation as the next Fed chair triggered a sharp late-week repricing, wiping out recent gains in equities, metals and cryptocurrencies while lifting the US dollar.
Bond markets led the shift as investors priced in Warsh’s preference for shrinking the Federal Reserve’s balance sheet, raising fears of tighter liquidity across global markets.
The reversal erased what had been a record-setting week: the S&P 500 had broken above 7,500 and the Dow briefly retook 50,000 before risk appetite collapsed.
Traders now head into next week focused on the “Warsh trade” alongside G7 talks, UK and Canada inflation data, FOMC minutes and US PMI readings for clues on how far the repricing may run.

Can the new Fed Chair shrink the balance sheet and cut interest rates, or is a policy collision inevitable?

With the dollar's surge threatening global stability, which nation's economy might be the first to break?

Is the era of the 'Fed put' officially over, and what does this mean for the average investor's portfolio?