US debt load could undercut Warsh's plan to shrink Fed balance sheet
Key takeaways
- US debt load could undercut Warsh's plan to shrink Fed balance sheet By Howard Schneider Fri, May 15, 2026 at 9:02 PM GMT+7 6 min read By Howard Schneider
- Treasuries, analysts said, with rising long-term interest rates a sign of the challenge awaiting the new Fed chair.
- Warsh, who was confirmed by the U.S.
US debt load could undercut Warsh's plan to shrink Fed balance sheet By Howard Schneider Fri, May 15, 2026 at 9:02 PM GMT+7 6 min read By Howard Schneider
WASHINGTON, May 15 (Reuters) - Incoming Federal Reserve chief Kevin Warsh s plans to shrink the U.S. central bank s "footprint" in financial markets could be constrained by rising federal debt and the potentially lost luster of U.S. Treasuries, analysts said, with rising long-term interest rates a sign of the challenge awaiting the new Fed chair.
Yields on U.S. Treasury bonds headed higher on Friday, with interest on the 2-year bond, a rough proxy for monetary policy, up more than half a percentage point, to more than 4%, since the start of the U.S. war with Iran raised new inflation concerns. The interest rate on the 30-year bond topped 5.1%, a level not seen on a persistent basis since before the 2007 to 2009 financial crisis and recession ushered in an era of easy monetary policy and cheap borrowing costs that may be at an end.