Warsh called it a 'good family fight'. Bond markets heard it as a hike warning.

The FOMC voted unanimously to hold, but Kevin Warsh's description of internal deliberations as a 'good family fight' is the most honest thing a Fed chair has said about FOMC dynamics in years, and markets priced it accordingly. Morgan Stanley's Andrew Szczurowski flagged that it remains unclear whether Warsh will follow through on the hawkish tone, given that the vote was unanimous for no change, while Bloomberg economist Stuart Paul noted that the committee's division means small data shifts could swing votes in either direction. The Fed's own projections show headline PCE at 3.6% this year falling to 2.3% next year, a trajectory that requires everything to go right on energy and services inflation. The practical implication for credit markets: Barings is explicitly positioning into BB and B-rated high yield at 6-8% yields as the higher-for-longer regime's most attractive risk-adjusted pocket, and institutional demand is described as sticky. Plan around elevated borrowing costs through at least 2027.