Citadel Securities Warns Markets Underestimating Hawkish Warsh Fed, Flagging September Hike Risk
- Citadel Securities told clients that markets are underpricing how activist and hawkish new Fed Chair Kevin Warsh (sworn in May 22) will be, with analysts including Frank Flight flagging rising odds of a rate hike as soon as the September FOMC (Bloomberg).
- The warning follows Warsh's first meeting June 16-17, when the FOMC held at 3.50%-3.75% but a dot-plot showed 9 of 18 officials penciling in at least one 2026 hike; Citadel cites sticky inflation, a resilient labor market and heavy AI capex as pressure points.
- The note layers onto broader bond-market repositioning for a 'Warsh Fed' and reinforces that rate volatility, not just AI-spend anxiety, is shaping the post-rout tape.