Fed Chair Warsh Just Said the One Thing About Inflation Every Investor Wanted to Hear

Fed Chair Warsh just set the tone for how investors are interpreting inflation by arguing it has peaked, with oil helping the outlook. Speaking at the ECB conference in Sintra and recapped on CNBC’s “Morning Call Sheet” Thursday, Warsh’s message—according to David Zervos of Jefferies—was that inflation is declining, helped by falling oil prices. Zervos linked the move to consumer expectations, noting gasoline has dropped for eight straight weeks from $4.50 in mid-May to $3.83 as of June 29, a 14.4% monthly fall. The Fed’s preferred gauge remains near the 90th percentile of its 12-month range, while markets still price uncertainty, with the 10-year Treasury yielding 4.44%. Zervos also flagged labor signals, with unemployment rising to about 4.3% versus 3.5% early in 2023, and a University of Michigan sentiment reading of 44.8 in May.