President Donald Trump Just Threw Fed Chair Kevin Warsh Under the Bus, and Things Could Get Ugly for Wall Street

President Trump is publicly criticizing Fed Chair Kevin Warsh and the FOMC for holding rates elevated, even though he initially backed Warsh's nomination. The political split lands as the central bank is raising rates, not cutting them.

The driver is inflation at a 67-month high of 4.2%. The article attributes the surge to "Trumpflation," blaming tariffs and the Iran war for pushing prices higher. That leaves the Fed fighting price pressure rooted in policies and events the White House itself helped set in motion.

Rate-hike expectations are building. Markets price a 64% probability of at least 75 basis points of hikes by September 2027, per the article. That path implies sustained tightening rather than a brief pause.

The equity risk centers on AI. Higher borrowing costs could slow AI infrastructure investment, a spending theme that has supported the market. Interpretation: if financing costs keep rising, capital-intensive buildouts face a steeper hurdle, and the article warns this could trigger a stock market correction.

CME, as an exchange operator, sits at the center of rate-futures positioning around this debate. Interpretation: public friction between the president and the Fed over policy direction raises uncertainty around the rate path, which tends to draw hedging activity into rate products.