Three weeks into his tenure, Fed Chair Kevin Warsh confronts inflation running at its fastest pace in three years, internal FOMC dissent, and a Treasury selloff that has investors pricing a rate hike by December 2026. This is a direct reversal of the rate-cut narrative that dominated early 2026, creating an unusually binary near-term policy path ahead of this week's FOMC decision.
For Armada's traditional repo desk, a rate-hike pricing environment raises SOFR expectations, widens bid-ask spreads on longer-duration Treasury collateral, and increases margin call frequency for hedge fund and asset manager counterparties. Term repo books priced off current SOFR forwards may need to be revisited if the December hike probability continues to rise.