Kevin Warsh has assumed leadership of the Federal Reserve as markets await a critical CPI release. Elevated oil prices linked to ongoing Middle East conflict have kept inflation expectations sticky, limiting the new Fed chair's room to ease. Bond traders are pricing increased uncertainty around the path of the federal funds rate, with some positioning for rates held higher for longer than previously expected.
For Armada's traditional repo desk, SOFR sensitivity across the book is the immediate concern. A hold-or-hike bias from Warsh compresses the rate environment that benchmarks repo pricing, while duration risk on Treasury collateral increases if the long end reprices upward. Primary dealer positioning and Treasury auction demand should be monitored closely through the next FOMC window.