2026年9月美联储决议深度解析：沃什首度加息与长端国债博弈

Jack Farley: We are live right now. I am joined by Joseph Wang, former senior trader for the Fed, a commentator on the Federal Reserve. Joseph, what did you make of the Fed meeting that just concluded Kevin Worsh's third meeting, the first hike? What are your thoughts?

Joseph Wang: Well, first off, thanks so much for inviting me. It's great to be back here. Great to see you again, Jack. Now I am actually pretty happy about this outcome because this is one of the not always doesn't always happen but I did call this perfectly well after I heard the Jackson Hole speech I was pretty sure that we were going to hike in September like 90% sure because when you read carefully his speech it was it was super clear he added two new things into his speech that he hadn't added before at Jackson Hole which of course is when a Fed chair gives his big speech he knows he's changing policy He said two things. One, of course, is that he didn't feel financial conditions were restrictive. So, Jack, come on. We've been talking about the Fed long enough to know that's like a huge huge billboard saying that I'm going to hike. Now, he said that before though, but what was also new that I'm surprised did not get as much air was that he introduced a new variable speed. At Jackson Hall, he talked about the speed of getting back to target. So, that tells me there was urgency. You put the two together, obviously hike was a done deal. And it was really surprising to me to to see that in the community there were so many people who had trouble believing this, but he was a man of his word. That means he's still worth listening to. Otherwise, you know, it'd be quite disappointing. So, he did hike. This is what I would expect. And I also thought that today we would get actually a somewhat of a hiking cycle. It would not be one and done. And there are two things we heard today that confirms that. Well, first off, there's a dot plot of course suggesting there were, you know, the dot plot is

Jack Farley: That was quite a ride we went on in 2022 and it will it will almost certainly be a smaller ride but it could be another hiking cycle. What is it do you think that's leading the Fed to hike not just once but possibly more? Is it inflation? Is it the labor market? Is it productivity growth as Warsh was talking about in the press conference?

Joseph Wang: Well, he he described it in a few ways. He suggested that growth was strong. So, the Fed is a dual mandate central bank, so employment and inflation. On the employment side, there's, you know, some debate on the numbers, but overall it seems stable. On the inflation side, it's been high for the past few years, but in the past few months it's been accelerating. So, balance of risk, they got to do something. Not only that, because they view growth as very strong, they have the leeway to hike. Now, if you remember Warsh during his testimony, he always said that he preferred lower rates. But he always qualified that by saying lower rates if inflation goes down. If inflation doesn't go down, you hike. And that's what he delivered today. So, if inflation continues to be high, growth and labor market continue to be strong, they're going to keep hiking. And if you look at the dot plot, the dot plot expects one more hike this year, maybe one more next year. But what was more telling was his phrasing today. Someone asked him, "Do you think rates are restrictive?" And he said he did not feel rates were restricting activity. That is a bombshell. If rates are not restricting activity, and you have above-target inflation, that means you got to take rates to a place where they do restrict activity. So, this is not going to be a one and done.

Jack Farley: That makes sense. Just making sure we are uh live on YouTube. The ex the ex viewers are adding up as well. So Jose just just said that Warsh explicitly saying financial conditions and interest rates were not restrictive. It is a bombshell.

Joseph Wang: it is a bombshell and he said that at Jackson Hole and everyone was like nah he's not going to hike to that this is like he's proved himself to be a man of his word

Jack Farley: so you think at least two more hikes not one

Joseph Wang: I think two more hikes yeah but again a lot this is a dynamic thing he's not telling you you know committing to stuff like that he's saying it's data dependent. But inflation the momentum is clear. The inflation that we are having is not because the economy is super hot, it's not because workers are demanding 5%, 8%, 10% wage increases like we had in the '70s. Inflation right now is cost push. It is driven by commodities. We're having a huge rally across the board, energy, oil, gas, agriculture and a lot of this is because of developments in the Middle East. And unless the war stops tomorrow, commodity prices are probably going to go higher. Not only that, but even if they don't go higher, the pass through will take some time. So inflation data is going to be hot for the next few months.

Jack Farley: And you you actually said the word Middle East. Kevin Wars did not even use that word at all. He kept on referring to geopolitical developments.

Joseph Wang: Canada, right? It's the Canada trade war. It's

Jack Farley: maybe Iceland.

Joseph Wang: It's a huge problem. I mean the the he does mention like commodities and it's not just oil agriculture and things like that. These are all downstream effects of geopolitical turmoil. If your input costs are higher, the finished goods are going to be higher. It's not something raising rates can create more oil, but you can crush aggregate demand so that it doesn't get embedded into expectations.

Jack Farley: Joseph, what did you make of the DOT plot? um what was most interesting to you and I'll we'll I'll share it right now so we can reference it.

Joseph Wang: Yeah, honestly the most interesting thing to me is that uh our friend Steve is not on the committee and yet someone next year is guiding towards a 100 basis points.

Jack Farley: Yeah, that's true.

Joseph Wang: I have no idea what's going on over there. Is that someone did they enter? Is it like a data entry in or something like that? That's a it's kind of a weird thing.

Jack Farley: Oh wow. There is one. Oh, so yes, Steve Meyer, our friend who was on the Fed uh uh he was a Fed governor, is no longer on there. He was very doubbish, very dovish, but someone else is carrying on the mantle.

Joseph Wang: Yeah. I don't know what's going on there. I thought, well, that surprised me. Now I see it on the screen. Um, other than that, I I think it's pretty much higher for longer. It's just you see that the neutral rate is moving higher. You see the projections for the long run moving higher. And that's just the Fed gradually acknowledging that the economy can handle higher rates and that the neutral rate is just higher than they thought. They hiked, it didn't slow the economy down as much as they thought, which means that policy wasn't as restrictive as they thought.

Jack Farley: Uh 2028 median federal funds rate the June projection was 3.4 now it's 3.9. So that's a that's a sizable increase and that's just higher for longer.

Joseph Wang: That that is higher for longer and even in yeah 2028 3.9 2029 3.6 and longer run Fed funds projections of 3.2 over 3.1. And yes, that's only 10 basis points, but it's a gradual drift higher.

Jack Farley: Yes. Yes. Neutral rate is higher than they thought they were. And so that makes sense, right? They hiked, didn't have the impact that they they thought they would, so they have to adjust their expectations of what neutral is.

Jack Farley: and these outlooks for real GDP they they're pretty Kevin Morris is pretty bullish on the economy or at least this but this real GDP of going up in 2026

Joseph Wang: So if you look at his statement and let me pull up the statement right now. He says a whole bunch of things. You know, he says that uh economic activity has been expanding at a solid pace, job gains have remained solid, unemployment rate has remained low. And he also mentioned strong productivity growth. But you don't really see that in the data. So it's kind of like his canned phrase, but maybe that's his worldview.

Jack Farley: Sorry. Sorry, Joseph. What is Kevin Worth saying that's not true? Sorry.

Joseph Wang: Strong productivity growth. You don't see that in the data. And he said that repeatedly actually. So it's it's kind of like his canned phrase, but maybe that's how he views the world.

Joseph Wang: Um yeah, I mean just inflation is is quite hot because we have a commodity we we're in a commodity bull market. Sulfur is going up, oil's going up, natural gas, agriculture. It's going to flow through.

Joseph Wang: so the traditional central bank view is that you look through supply shocks right so the dogma is that monetary policy acts with long lags. So let's say there's a oil shock, you don't hike because by the time the rate hike takes effect, the oil shock might be over. But if you have inflation that has been high for years, you can't just look through it anymore because inflation expectations become unanchored. People start expecting higher prices, businesses raise prices, workers demand higher wages. So the dogma breaks down. And that's why Warsh is acting. Even though it's supply driven, he has to act to keep credibility.

Jack Farley: Uh we got some comments, Joseph. Florida fella says Joe said in his YouTube videos that he likes the long bond. Does he still like it? Is he expecting the Fed to get inflation under control?

Joseph Wang: I love the long bond. I honestly I just What is it right now? 5.35%. And if you want 30-year tips, it's like 3.1%. Uh dude, I think this is a really really good risk-reward. You lock in 3.1% real return above inflation for 30 years, or 5.35% nominal. Historically, that is very attractive. And more importantly, Warsh showed today that the Fed is serious about fighting inflation. Buying the long bond is a bet that the Fed will do what it takes to bring inflation down. If they are willing to hike and keep policy tight, inflation will eventually fall, and that makes the long bond a great investment.

Jack Farley: Um Joseph, by the way, could you retweet one of the the posts I tagged you in?

Joseph Wang: Which one is that?

Jack Farley: I uh any anyone I I can uh I can send it to you. Um the Let's see. Here we go. I'll Okay, I got it. I got I got y

Jack Farley: um yeah the the long bond is is interesting and it and it rallied today but betting on the long bond is a bet that the Fed is going to get inflation under control.

Joseph Wang: Much better after today. So I think there was a huge fear that

Joseph Wang: President Trump would appoint someone and then Trump would end up running monetary policy and there's a lot of reason to be afraid of that. You had a lot of fear that the new chair would just be a puppet and cut rates to juice the economy and please the administration.

Joseph Wang: he was I mean if if you are a botonist, right, that's that's reason to panic, right? This guy is he's it's not just that he's not going to do his job, he's going to make things worse. But today Warsh showed independence. He hiked when the political pressure was for lower rates, because inflation and growth called for it. That removes a huge tail risk for bond investors.

Jack Farley: What did you make of the communication style of war today and the way that he handled the questions?

Joseph Wang: So I think Kevin is uh definitely improving. Well, first off, I'll note that the statement itself very tur as we know. Uh, Chair Wars doesn't like to write long essays. He keeps it short and terse. In the Q&A, he was direct, he didn't mince words, he didn't give excessive forward guidance. He was clear about the risks of inflation and clear about the strength of the economy. It was a very crisp performance.

Jack Farley: and no questions on the balance sheet.

Joseph Wang: No, I think people have forgotten about that. So I so what what what could happen in the balance sheet and I think is is going to happen is that on the reserve management side, reserves are still pretty abundant. They don't need to do active intervention right now. As long as overnight funding markets are functioning smoothly and repo rates are well-behaved, they can just let the balance sheet run in the background.

Joseph Wang: no they had uh they had some reserve management purchases but they've basically suspended that for some time. So from their perspective they needed to make sure liquidity was fine, and right now things are functioning.

Joseph Wang: So the basis trade exists because you have a lot of asset managers who are adding duration through treasury futures. What could be happening is that hedge funds step in, buy cash Treasuries, sell futures, and fund it in the repo market to capture the basis. If repo rates go up with Fed hikes, the profitability of that trade compresses, which could lead to some unwind, but so far the plumbing has held up.

Jack Farley: Uh gentleman in the comments who was like to hear Joseph's opinion about housing mortgage rates and how that's affected by the Fed's decision noting that mortgage rates have been elevated.

Joseph Wang: Well, mortgage risks are above 7% right. So I follow the housing market and uh it's just not doing very well. Um in the beginning, this is actually pretty interesting because you had the lock-in effect where existing homeowners didn't want to sell, so inventory was very tight, which kept home prices high. But as high rates persist, the freeze in transaction volumes gets worse. Affordability is at generational lows, and it is weighing heavily on the entire housing ecosystem.

Joseph Wang: I think it's mostly rates. Now, you could also say it's housing prices, but if you look at the past few years, prices have basically been pretty steady while rates went from 3% to over 7%. That completely breaks the monthly payment math for buyers. As long as the Fed keeps policy rates elevated and Treasury yields stay up, mortgage rates aren't coming down meaningfully, so housing will remain sluggish.

Jack Farley: Uh there's another question about can Joe speak about why TLT has gone down since the decision? When I first saw that comment I thought it was wrong because TLT looked up on the day.

Joseph Wang: Uh well TLT looks like it's up. Now I would out note that TLT is not just the uh 30-year. It's 20 years and above and the 20-y year is less liquid and

Jack Farley: uh actually usually trades at a higher yield than the um

Joseph Wang: 30-year. So yeah, no TLT looks like it's up. 30-year is is just so TLT up in price, 30-year bond down in yields, but

Jack Farley: for the day, but but the opposite way since 150 before the Fed meeting.

Joseph Wang: Uh yeah. Yeah. So,

Jack Farley: yeah,

Joseph Wang: the 30-year yield was down by as much as I think five basis points and now it's only down by one. So there's there's two there's actually a debate on how the long bond reacts. On one hand, a hawkish hike increases recession risk, which should rally the long bond and lower yields. On the other hand, higher policy rates shift the short end up and can cause immediate repricing. What you saw intraday was just the market digesting the initial headline versus the press conference commentary.

Jack Farley: Joseph, does uh I remember maybe 12

Joseph Wang: Oh, equities have recorded equities have uh rebounded a lot too. So,

Jack Farley: yes.

Jack Farley: Yeah. Um, I remember maybe 18 months ago, maybe longer than that, you started talking about these Treasury buybacks, Treasury buybacks, and you know, a lot of people wonder how that actually impacts the market.

Joseph Wang: So Treasury yields are largely the expected path of policy. However, when you go to the 30-year tenor, you know, nobody really knows what the path of policy will be in 20 or 30 years. So the 30-year bond is heavily driven by term premium and raw supply and demand dynamics. This is where the Treasury buyback program comes into play. The Treasury conducts buybacks for two reasons: liquidity support and cash management. They issue highly liquid Treasury bills and use the proceeds to buy back illiquid, off-the-run Treasury securities that are trading at a discount. Initially, the market had huge expectations that this would act like pseudo-QE. But in reality, the sizes have been modest and targeted, aimed primarily at cleaning up off-the-run frictions rather than artificially suppressing long-term yields across the board.

Jack Farley: 5x wow spoiled

Joseph Wang: 10 yeah I know so the market was disappointed now the market was further disappointed when we actually had the auction results And even though they were buying back bonds, they are very price sensitive. They aren't just going to buy at any price to bail out the long end; they buy off-the-run bonds that offer genuine value for Treasury cash management.

Jack Farley: How and how much of the per purchases were in off the run issues, as you said, the the ones trading at a discount, all of them.

Joseph Wang: Yeah. is is either like a 16-year security or how much of it is they're just old bonds that have a very low coupon so a low price as well. So they have very deep discounts. The Treasury steps in to buy those back, which helps dealers clear stale inventory and improves market functioning in the secondary market.

Jack Farley: I I gotcha. Um so Joseph you said earlier stock market's a bubble. Tell me tell me your thoughts here.

Joseph Wang: Yeah. So, the stock market is obviously a huge bubble. Where are we trading right now? Um, yeah. So, how do I know it's a bubble? Because gosh, honestly, with risk-free rates above 5%, inflation risks reaccelerating, and the Fed actively restarting a rate hike cycle, equity valuations are sitting near historical extremes. The market is pricing in absolute perfection—assuming robust earnings growth without any hit from higher discount rates. When reality diverges from that rosy narrative, the downside risk in equities is substantial.

Jack Farley: That does. Uh Joseph, thanks so much. People can find you on X at Joseph Wang. What are you doing these days? You got a YouTube channel, but where where else can people follow your work?

Joseph Wang: So, I have uh a YouTube channel. Every week I post weekly videos talking about my thoughts on the markets. I will post this video on it as well. Also, I write on FedGuy.com, covering monetary mechanics, Fed plumbing, and how to read Treasury funding announcements. Anyway, happy to check it out and thanks so much for inviting me. It's uh great to be here.