FTSE Russell said Kevin Warsh’s first FOMC meeting marked a structural break for markets by ending forward guidance and making each rate decision more meeting-by-meeting.
Fed funds futures now price one to two rate hikes by December 2026, while the 30-year Treasury yield climbed to 5.3% after Warsh signaled a tougher inflation stance.
July’s market turbulence masked broader resilience: the FTSE All-World rose 0.1%, seven of 11 industry groups gained, and 62% of non-hardware stocks finished above their 50-day averages.
AI-linked hardware remained the weak spot, with Korean semiconductor names down 16.7% intramonth, as FTSE Russell warned AI capex is a two-way risk despite projected 2026 hyperscaler spending of $780 billion.
The report also argued inflation may be underpriced, with one-year U.S. inflation swaps near 2.0% even as sticky CPI held around 2.8%, pointing to a more volatile higher-rate backdrop.