US Short-End Yields Fall After Warsh Signals Fewer Fed Meetings

Traders were pricing in more than a 90% chance of a quarter-point rate increase at the December gathering. “The market started moving when he discussed the change in scheduling, interpreting the move as dovish,” said Steve Englander, global head of Group of 10 foreign-exchange research at Standard Chartered Bank.The US dollar erased its earlier gains to slip after Warsh announced the change in scheduling.

Earlier, officials left US borrowing costs at 3.75%-4%, though two policymakers, Governor Lisa Cook and Cleveland Fed President Beth Hammack, dissented in favor of boosting rates by a quarter percentage point. The Fed had boosted rates in September for the first time in three years.Market participants, however, shifted focus to the logistics of the Fed’s adjusted schedule.“We believe eight meetings per year is the right number for the FOMC,” Warsh said.

He’d first raised the idea of reducing the Fed’s annual number of policy meetings to six from eight at the July gathering. He argued then that cutting the frequency of meetings would allow more information and data to accumulate between them, according to the meeting minutes.“Given that there are market contracts trading on all currently scheduled meetings, the Fed will probably want to tell the market well ahead of time to avoid any pricing issues,” said Gennadiy Goldberg, head of US interest rate strategy at TD Securities.December HikeThe announcement did little to alter the market’s expectation for a December rate increase.

Traders are pricing in three quarter-point increases between now and the middle of 2027. Long-term bond yields remained higher by five basis points. To Kay Haigh, global head and CIO of Fixed Income and Liquidity Solutions at Goldman Sachs Asset Management, the acceleration of inflation seen in recent data is an indication that risks remain.“We expect the Fed to resume rate hikes in December,” he said.

“Another increase in energy prices or further strong data prints could bring additional tightening into play next year.”In its statement, the Federal Open Market Committee said inflation remained elevated, economic activity was expanding “at a strong pace” and domestic spending was “resilient.”“The pressure is still on going forward around elevated inflation as the focus remains on the 2% official target,” Gregory Faranello, head of macro strategy at South Street Securities Holdings said.

Around the same time, a selloff that had sent US Treasury yields to multidecade highs began to stall as jitters around the artificial intelligence trade sent investors in search of havens. A Bloomberg index of the Treasury market’s returns is up 1.9% in October through Tuesday’s close, on course for its best monthly performance since early 2025. --With assistance from Melos Ambaye, Alexandra Harris, Alice Atkins, Greg Ritchie, Kristine Aquino and Edward Bolingbroke.(Updates with pricing, commentary and context throughout.)More stories like this are available on bloomberg.com©2026 Bloomberg L.P.